<PAGE>
REGISTRATION NO. 333-20175
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
NATIONSBANK CORPORATION
(name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
NORTH CAROLINA 6711 56-0906609
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or organization) Industrial Classification Code Number) Identification No.)
</TABLE>
NATIONSBANK CORPORATE CENTER
100 NORTH TRYON STREET
CHARLOTTE, NORTH CAROLINA 28255
(704) 386-5000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
PAUL J. POLKING
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
NATIONSBANK CORPORATION
NATIONSBANK CORPORATE CENTER
100 NORTH TRYON STREET
CHARLOTTE, NORTH CAROLINA 28255
(704) 386-5000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPIES TO:
<TABLE>
<S> <C>
R. DOUGLAS HARMON JOHN P. GREELEY
SMITH HELMS MULLISS & MOORE, L.L.P. SMITH, MACKINNON, GREELEY, BOWDOIN
214 NORTH CHURCH STREET & EDWARDS, P.A.
CHARLOTTE, NORTH CAROLINA 28202 255 SOUTH ORANGE AVENUE, SUITE 800
(704) 343-2000 ORLANDO, FLORIDA 32801
(407) 843-7300
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
<PAGE>
(A redherring appears on the left hand side of this page, rotated 90
degrees. Text follows.)
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
SUBJECT TO COMPLETION DATED MARCH 6, 1997
PROXY STATEMENT-PROSPECTUS MARCH , 1997
NationsBank(RegisterMark)
PROSPECTUS
This Proxy Statement-Prospectus relates to the shares of common stock (the
"NationsBank Common Stock") of NationsBank Corporation, a North Carolina
corporation ("NationsBank"), offered hereby to the stockholders of First Federal
Savings Bank of Brunswick, Georgia, a federally chartered stock savings bank
organized and existing under the laws of the United States ("First Federal"),
upon consummation of a proposed merger (the "Merger") of Interim First Federal
Savings Bank of Brunswick, Charlotte, North Carolina, an interim federal stock
savings bank and wholly owned subsidiary of NationsBank ("Merger Sub"), with and
into First Federal. The Merger will be effected pursuant to a series of
agreements and amendments thereto between NationsBank (as successor to
C&S/Sovran Corporation, The Citizens and Southern Corporation, Citizens and
Southern Georgia Corporation and The Citizens and Southern National Bank
(collectively, "C&S/Sovran")) and First Federal, two orders issued by the
Superior Court of Glynn County, Georgia (the "Court") in connection with
litigation brought by First Federal against predecessors of NationsBank (the
"Litigation") and certain letters between NationsBank and First Federal
(collectively, the "Agreement"). The Agreement and the Litigation are more fully
described below in "SUMMARY -- General" and " -- Litigation" and "THE
MERGER -- Background of the Merger."
Upon completion of the Merger (the "Effective Date"), the outstanding
shares of First Federal common stock, $1.00 par value per share ("First Federal
Common Stock"), will be converted into the right to receive an aggregate of
2,448,400 shares of NationsBank Common Stock which equates to 1.60 shares of
NationsBank Common Stock for each share of First Federal Common Stock (the
"Exchange Ratio"), based upon the calculations set forth in the Share
Calculation Letter (as defined below). Consummation of the Merger is subject to
several conditions, including, among others, the approval of the stockholders of
First Federal and the approval of appropriate regulatory agencies. Upon
consummation of the merger of Merger Sub with and into First Federal, First
Federal will be the surviving entity and will continue to conduct its business
and operations after the merger as a wholly owned subsidiary of NationsBank and
as a federal stock savings bank under the name of First Federal Savings Bank of
Brunswick, Georgia. See "THE MERGER -- Description of the Merger" and
" -- Conditions to the Merger."
NationsBank Common Stock is listed on the New York Stock Exchange, Inc.
(the "NYSE") and the Pacific Stock Exchange Incorporated (the "PSE") under the
trading symbol "NB." NationsBank Common Stock is also listed on the London Stock
Exchange (the "LSE") and certain shares of NationsBank Common Stock are listed
also on the Tokyo Stock Exchange. The last reported sales price of NationsBank
Common Stock on the NYSE Composite Transactions List on March , 1997 was
$ per share and on October 10, 1996, the last trading day preceding the
final order of the Court related to the Litigation, was $43.75 per share. First
Federal Common Stock is traded on The Nasdaq Stock Market as a National Market
System security under the trading symbol "FFBG." The last reported sales price
per share of First Federal Common Stock as reported by The Nasdaq Stock Market
on March , 1997 was $ per share and on October 10, 1996 was $72.00 per
share. See "PRICE RANGE OF COMMON STOCK AND DIVIDENDS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH
CAROLINA (THE "COMMISSIONER") OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION, THE COMMISSIONER OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROXY STATEMENT-PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF NATIONSBANK COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS
OR BANK DEPOSITS, ARE NOT OBLIGATIONS OF OR GUARANTEED BY ANY BANKING OR
NON-BANKING AFFILIATE OF NATIONSBANK AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS OF
FIRST FEDERAL SAVINGS BANK
OF BRUNSWICK, GEORGIA TO BE HELD
APRIL 11, 1997
THIS PROXY STATEMENT-PROSPECTUS SERVES AS A PROXY STATEMENT OF FIRST FEDERAL IN
CONNECTION WITH THE SOLICITATION OF PROXIES TO BE USED AT THE SPECIAL MEETING OF
STOCKHOLDERS OF FIRST FEDERAL TO BE HELD ON APRIL 11, 1997 FOR THE PURPOSES
DESCRIBED HEREIN (THE "SPECIAL MEETING") AND IS FIRST BEING MAILED TO
STOCKHOLDERS OF FIRST FEDERAL ON OR ABOUT MARCH 14, 1997.
<PAGE>
No person is authorized to give any information or make any representation
other than those contained or incorporated in this Proxy Statement-Prospectus,
and, if given or made, such information or representation should not be relied
upon as having been authorized by NationsBank or First Federal. This Proxy
Statement-Prospectus does not constitute an offer to exchange or sell, or a
solicitation of an offer to exchange or purchase, the securities offered by this
Proxy Statement-Prospectus, or the solicitation of a proxy, in any jurisdiction
in which such offer or solicitation is not authorized or to or from any person
to whom it is unlawful to make such offer or solicitation. The information
contained in this Proxy Statement-Prospectus speaks as of the date hereof unless
otherwise specifically indicated. Information contained in this Proxy
Statement-Prospectus regarding NationsBank has been furnished by NationsBank,
and information herein regarding First Federal has been furnished by First
Federal.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE PAGE
<S> <C> <C> <C>
</TABLE>
<TABLE>
<S> <C>
AVAILABLE INFORMATION................................ 3
INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE....................................... 3
SUMMARY.............................................. 5
THE SPECIAL MEETING OF STOCKHOLDERS
OF FIRST FEDERAL................................... 17
General............................................ 17
Proxies............................................ 17
Solicitation of Proxies............................ 17
Record Date and Voting Rights...................... 17
Recommendation of First Federal Board of
Directors....................................... 18
THE MERGER........................................... 18
Description of the Merger.......................... 18
Effective Date of the Merger....................... 18
Exchange of Certificates........................... 19
Background of the Merger........................... 19
NationsBank Reasons for the Merger................. 21
First Federal Reasons for the Merger............... 22
Opinion of First Federal's Financial Advisor....... 23
Conditions to the Merger........................... 26
Conduct of Business Prior to the Merger............ 28
Modification, Waiver and Termination;
Expenses........................................ 20
Certain Federal Income Tax Consequences............ 30
Interests of Certain Persons in the Merger......... 31
Absence of Dissenters' Rights...................... 32
Accounting Treatment............................... 32
Bank Regulatory Matters............................ 32
Restrictions on Resales by Affiliates.............. 33
Dividend Reinvestment and Stock
Purchase Plan................................... 34
PRICE RANGE OF COMMON STOCK AND
DIVIDENDS.......................................... 34
NationsBank........................................ 34
First Federal...................................... 35
INFORMATION ABOUT NATIONSBANK........................ 35
General............................................ 35
Management and Additional Information.............. 36
Supervision and Regulation......................... 36
INFORMATION ABOUT FIRST FEDERAL...................... 38
General............................................ 38
Management and Additional Information.............. 38
Supervision and Regulation......................... 39
Recent Accounting Pronouncements................... 42
COMPARISON OF NATIONSBANK COMMON
STOCK AND FIRST FEDERAL COMMON
STOCK.............................................. 42
NationsBank........................................ 42
First Federal...................................... 42
Comparison of Voting and Other Rights.............. 43
LEGAL OPINIONS....................................... 45
EXPERTS.............................................. 45
SHAREHOLDER PROPOSALS................................ 45
OTHER MATTERS........................................ 45
APPENDIX A -- Opinion of Interstate/Johnson
Lane Corporation................................... A-1
</TABLE>
2
<PAGE>
AVAILABLE INFORMATION
NationsBank has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-4 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
relating to the shares of NationsBank Common Stock to be issued in connection
with the Merger. For further information pertaining to the shares of NationsBank
Common Stock to which this Proxy Statement-Prospectus relates, reference is made
to such Registration Statement, including the exhibits and schedules filed as a
part thereof. As permitted by the rules and regulations of the Commission,
certain information included in the Registration Statement is omitted from this
Proxy Statement-Prospectus. In addition, NationsBank is subject to certain of
the informational requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and in accordance therewith files certain reports,
proxy statements and other information with the Commission. Such reports, proxy
statements and other information can be inspected and copied at the public
reference room of the Commission, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, and copies of such materials can be obtained by mail from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates. The Commission maintains an
Internet web site that contains reports, proxy and information statements and
other information regarding issuers who file electronically with the Commission.
The address of that site is http://www.sec.gov. In addition, copies of such
materials are available for inspection and reproduction at the public reference
facilities of the Commission at its New York Regional Office, 7 World Trade
Center, Suite 1300, New York, New York 10048; and at its Chicago Regional
Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Reports, proxy statements and other information concerning
NationsBank also may be inspected at the offices of the NYSE, 20 Broad Street,
New York, New York 10005 and at the offices of the PSE, 301 Pine Street, San
Francisco, California 94104.
First Federal is subject to certain of the informational requirements of
the Office of Thrift Supervision ("OTS") under Section 12 (i) of the Exchange
Act and, in accordance therewith, files certain reports, proxy statements and
other information with the OTS. Such reports, proxy statements and other
information can be inspected and copied at prescribed rates at the public
reference facilities maintained by the OTS at 1776 G Street, N.W., Washington,
D.C. 20552. Copies of such materials can be obtained at prescribed rates by
writing to the OTS, 1700 G Street, N.W., Washington, D.C. 20552.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission are hereby
incorporated by reference in this Proxy Statement-Prospectus: (a) the
NationsBank Annual Report on Form 10-K for the year ended December 31, 1995, as
filed March 29, 1996; (b) the NationsBank Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1996, as filed May 10, 1996; June 30, 1996, as filed
August 14, 1996; and September 30, 1996, as filed November 13, 1996; (c) the
description of NationsBank Common Stock contained in the NationsBank
registration statement filed pursuant to Section 12 of the Exchange Act as
modified by the NationsBank Current Report on Form 8-K filed January 16, 1997;
(d) the Boatmen's Bancshares, Inc. Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1996, as filed on May 15, 1996, June 30, 1996, as filed
on August 12, 1996, and September 30, 1996, as filed on November 13, 1996; and
(e) the NationsBank Current Reports on Form 8-K filed January 12, 1996; February
1, 1996; March 8, 1996; April 17, 1996; May 16, 1996; July 5, 1996; July 31,
1996; September 6, 1996 (as amended by Form 8-K/A-1 filed on September 11, 1996
and Form 8-K/A-2 filed on November 13, 1996); September 20, 1996 (as amended on
September 23, 1996); October 25, 1996; November 14, 1996; December 4, 1996;
December 17, 1996 (two Forms 8-K); January 16, 1997; and February 3, 1997.
The following documents previously filed by First Federal with the OTS are
hereby incorporated by reference in this Proxy Statement-Prospectus: the First
Federal Annual Report on Form 10-K for the year ended September 30, 1996, as
filed December 30, 1996; the First Federal Quarterly Report on Form 10-Q for the
quarter ended December 31, 1996, as filed February 14, 1997; and the First
Federal Current Report on Form 8-K filed February 3, 1997.
In addition, all documents filed by NationsBank and First Federal with the
Commission and the OTS, respectively, pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date hereof and prior to the time at which
the Special Meeting has been finally adjourned are hereby deemed to be
incorporated by reference herein. Any statements contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Proxy Statement-Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document that also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Proxy Statement-Prospectus.
THIS PROXY STATEMENT-PROSPECTUS INCORPORATES CERTAIN DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THE DOCUMENTS RELATING TO
NATIONSBANK (OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH EXHIBITS ARE NOT
SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH DOCUMENTS) ARE AVAILABLE WITHOUT
CHARGE
3
<PAGE>
UPON REQUEST FROM JOHN E. MACK, SENIOR VICE PRESIDENT AND TREASURER, NATIONSBANK
CORPORATION, NATIONSBANK CORPORATE CENTER, CHARLOTTE, NORTH CAROLINA 28255,
TELEPHONE (704)386-5972. THE DOCUMENTS RELATING TO FIRST FEDERAL (OTHER THAN
EXHIBITS TO SUCH DOCUMENTS WHICH EXHIBITS ARE NOT SPECIFICALLY INCORPORATED BY
REFERENCE IN SUCH DOCUMENTS) ARE AVAILABLE WITHOUT CHARGE UPON REQUEST FROM
ROBERT B. SAMS, FIRST FEDERAL SAVINGS BANK OF BRUNSWICK, GEORGIA, 777 GLOUCESTER
STREET, BRUNSWICK, GEORGIA 31520, TELEPHONE (912) 265-1410. NATIONSBANK OR FIRST
FEDERAL, AS THE CASE MAY BE, WILL SEND THE REQUESTED DOCUMENTS BY FIRST-CLASS
MAIL WITHIN ONE BUSINESS DAY OF THE RECEIPT OF THE REQUEST. IN ORDER TO ENSURE
TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY APRIL 4, 1997.
Persons requesting copies of exhibits to such documents that are not
specifically incorporated by reference in such documents will be charged the
costs of reproduction and mailing.
4
<PAGE>
SUMMARY
THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN INFORMATION SET FORTH ELSEWHERE
IN THIS PROXY STATEMENT-PROSPECTUS AND IS NOT INTENDED TO BE COMPLETE. IT IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO MORE DETAILED INFORMATION CONTAINED
ELSEWHERE IN THIS PROXY STATEMENT-PROSPECTUS, THE ACCOMPANYING APPENDIX AND THE
DOCUMENTS INCORPORATED HEREIN BY REFERENCE. EXCEPT AS OTHERWISE INDICATED, ALL
INFORMATION IN THIS PROSPECTUS GIVES EFFECT TO A 2-FOR-1 SPLIT OF THE
NATIONSBANK COMMON STOCK PAYABLE FEBRUARY 27, 1997.
GENERAL
This Proxy Statement-Prospectus, notice of Special Meeting of First Federal
stockholders to be held on April 11, 1997 and form of proxy solicited in
connection therewith are first being mailed to First Federal stockholders on or
about March 14, 1997. At the Special Meeting, the holders of First Federal
Common Stock will consider and vote on whether to approve the Agreement and the
transactions contemplated thereby.
For purposes of the Special Meeting and this Proxy Statement-Prospectus,
the Agreement is deemed to include the following documents, each of which is
filed as an exhibit to the Registration Statement of which this Proxy Statement-
Prospectus forms a part: Amended and Restated Agreement and Plan of
Reorganization, dated as of November 20, 1989, between NationsBank (as successor
to C&S/Sovran) and First Federal (the "Restated Agreement"); Amendment Number
One to the Amended and Restated Agreement and Plan of Reorganization, dated as
of August 20, 1990, between NationsBank (as successor to C&S/Sovran) and First
Federal ("Amendment No. 1"); Amendment Number Two to the Amended and Restated
Agreement and Plan of Reorganization, dated as of December 19, 1990, between
NationsBank (as successor to C&S/Sovran) and First Federal ("Amendment No. 2");
Order of the Court, dated December 16, 1994 (the "First Order"); Order of the
Court, dated October 11, 1996 (the "Second Order"); letter from First Federal to
NationsBank, dated November 12, 1996, regarding the calculation of the Exchange
Ratio (the "Share Calculation Letter"); and letter from First Federal to
NationsBank, dated January 17, 1997, regarding the waiver of certain provisions
of the Agreement (the "Waiver Letter").
THE COMPANIES
NATIONSBANK. NationsBank is a bank holding company registered under the
Bank Holding Company Act of 1956, as amended (the "BHCA"), was organized under
the laws of the State of North Carolina in 1968 and has as its principal assets
the stock of its subsidiaries. Through its banking subsidiaries (the "Banks")
and its various non-banking subsidiaries, NationsBank provides banking and
banking-related services, primarily throughout the Southeast and Mid-Atlantic
states and Texas. As of December 31, 1996, NationsBank had total assets of
$185.79 billion. The principal executive offices of NationsBank are located at
NationsBank Corporate Center, 100 North Tryon Street, Charlotte, North Carolina
28255, and its telephone number is (704) 386-5000. All references herein to
NationsBank refer to NationsBank Corporation and its subsidiaries, unless the
context otherwise requires.
For additional information regarding NationsBank and the combined company
that would result from the Merger, see "THE MERGER," "INFORMATION ABOUT
NATIONSBANK" and "SUMMARY -- Recent Developments; Acquisition of Boatmen's
Bancshares, Inc."
FIRST FEDERAL. First Federal is a federally chartered stock savings bank,
originally chartered in 1926. First Federal is subject to supervision and
regulation by the OTS and the Federal Deposit Insurance Corporation ("FDIC"),
and its deposits are insured through the Savings Association Insurance Fund
("SAIF") of the FDIC. First Federal's operations are conducted from its
headquarters in Brunswick, Georgia, two branch offices in Brunswick, Georgia,
and two branch offices on St. Simon's Island, Georgia. As of December 31, 1996,
First Federal had total assets of $254 million, total deposits of $220 million,
and total stockholders' equity of $27 million. First Federal's principal
executive offices are located at 777 Gloucester Street, Brunswick, Georgia
31520, and its telephone number is (912) 265-1410.
For additional information regarding First Federal, see "THE MERGER" and
"INFORMATION ABOUT FIRST FEDERAL."
SPECIAL MEETING AND VOTE REQUIRED
The Special Meeting will be held on April 11, 1997, at which time the
stockholders of First Federal will be asked to approve the Agreement and the
transactions contemplated thereby. The record holders of First Federal Common
Stock at the close of business on March 3, 1997 (the "Record Date") are entitled
to notice of and to vote at the Special Meeting. On the Record Date, there were
approximately 531 holders of record of First Federal Common Stock and 1,530,250
shares of First Federal Common Stock outstanding.
5
<PAGE>
The affirmative vote of the holders of at least two-thirds of the
outstanding shares of First Federal Common Stock is required to approve the
Agreement and the transactions contemplated thereby. As of the Record Date,
directors and executive officers of First Federal and their affiliates
beneficially owned 430,923 shares, or 28.16%, of the First Federal Common Stock
entitled to vote at the Special Meeting. All such directors and officers have
indicated that they intend to vote such shares in favor of the Agreement,
although they are not obligated to do so. See "THE SPECIAL MEETING OF
STOCKHOLDERS OF FIRST FEDERAL."
Shareholders of NationsBank are not required to approve the Agreement and
the transactions contemplated thereby.
THE MERGER
In the Merger, subject to the terms of the Agreement, Merger Sub will merge
with and into First Federal, which will be the surviving entity, and will
continue to conduct its business and operations after the Merger as a wholly
owned subsidiary of NationsBank and as a federal stock savings bank under the
name of First Federal Savings Bank of Brunswick, Georgia. Each executive officer
and each director of First Federal will resign as such, effective immediately
upon consummation of the Merger, and NationsBank will fill those positions, in
its discretion, immediately thereafter. All of the shares of NationsBank Common
Stock issued and outstanding on the Effective Date shall remain issued and
outstanding after the Effective Date and shall be unaffected by the Merger. Each
of the shares of Merger Sub common stock shall be converted into one share of
First Federal Common Stock. All of the shares of First Federal Common Stock
issued and outstanding on the Effective Date shall be converted into the right
to receive an aggregate of 2,448,400 shares of NationsBank Common Stock which
equates to 1.60 shares of NationsBank Common Stock for each share of First
Federal Common Stock.
No fractional shares of NationsBank Common Stock will be issued as a result
of the Merger. Each holder of First Federal Common Stock who would otherwise be
entitled to receive a fraction of a share of NationsBank Common Stock (after
taking into account all of the shareholder's certificates) will receive, in lieu
thereof, the equivalent cash value of such fractional share based upon the
average closing price of a share of NationsBank Common Stock as reported by the
NYSE for the 20 trading days immediately preceding the five consecutive calendar
days immediately preceding the Effective Date (the "Base Period Trading Price"),
without interest.
Consummation of the Merger is subject to several conditions, including,
among others, the approval of the stockholders of First Federal and the approval
of appropriate regulatory agencies. The Merger will be effected by filing the
Plan of Merger as part of the Articles of Combination executed by First Federal
and Merger Sub (the "Articles of Combination") with the OTS. See "THE
MERGER -- Conditions to the Merger."
For additional information relating to the Merger, see "THE MERGER."
LITIGATION
In September 1991, First Federal filed suit against C&S/Sovran alleging
that C&S/Sovran breached a merger agreement then in effect between them by
failing to use its best efforts to consummate the merger described therein and
further alleging that First Federal was entitled to damages and/or specific
performance of the agreement on terms unaffected by C&S/Sovran's alleged
breaches which, if granted, would result in an exchange of approximately one
share of C&S/Sovran stock for each share of First Federal stock. After extensive
discovery, the trial court split the case into two parts for separate
determinations of liability and, if necessary, damages. A jury trial was held on
the issue of liability in May 1994. That jury found that C&S/Sovran had breached
the merger agreement in March 1991. Following the jury trial, the Court issued
its First Order on December 16, 1994 requiring C&S/Sovran to specifically
perform the merger agreement. The issue remained as to when the transaction
would have closed but for C&S/Sovran's breach of the merger agreement, and this
issue was reserved for a second trial. The Georgia Supreme Court affirmed the
First Order in December 1995. In July 1996, a second jury found that the merger
would have closed on June 19, 1991 but for C&S/Sovran's breach of the merger
agreement. The Court then held an evidentiary hearing in August 1996 to
determine certain issues relating to the merger. On October 11, 1996, the Court
issued its Second Order as a result of which NationsBank (as successor to
C&S/Sovran) is obligated to specifically perform the terms of the merger
agreement and to consummate the merger as promptly as possible, consistent with
applicable law, in accordance with the merger agreement, as modified by the
Second Order. The 2,448,400 shares of NationsBank Common Stock to be offered to
First Federal shareholders in the Merger, as described above, was derived by the
First Federal Board of Directors from the Second Order.
The Second Order held that (a) the number of shares of NationsBank Common
Stock to be offered to First Federal's stockholders was 2,560,536 (subsequently
adjusted to 2,564,186 in accordance with the Share Calculation Letter) plus a
6
<PAGE>
number of shares based on the difference between dividends paid on First Federal
Common Stock and dividends paid on C&S/Sovran common stock or NationsBank Common
Stock, as appropriate, since June 19, 1991 (the "Dividend Differential"); (b)
NationsBank may reduce the number of shares so offered by the amounts First
Federal is required to pay to its executive officers under certain change of
control agreements (the "Change in Control Agreements"); and (c) First Federal
may compensate its litigation attorneys at a rate of $200 per hour plus a lump
sum payment of $250,000, with the number of offered shares to be reduced by an
amount equal to any legal fees paid by First Federal in excess thereof,
including contingency fees First Federal believes it is obligated to pay under a
September 27, 1991 contingency agreement entered into by First Federal with its
litigation attorneys.
On November 12, 1996, First Federal sent to NationsBank the Share
Calculation Letter, which addresses the method by which the Second Order will be
implemented. Through a series of adjustments, the Share Calculation Letter
provides that $1,260,371 of the Dividend Differential will be paid in cash to
certain First Federal executive officers pursuant to the Change in Control
Agreements. The Share Calculation Letter provides further that First Federal
will pay its litigation attorneys the remaining Dividend Differential
($6,284,282) plus an amount equal to the fair market value of 115,786 shares of
NationsBank Common Stock in full satisfaction of the September 27, 1991
contingency fee agreement. As a result of these adjustments, an aggregate of
2,448,400 shares of NationsBank Common Stock will be offered to First Federal's
shareholders' which equates to 1.60 shares of NationsBank Common Stock for each
share of First Federal Common Stock.
See "THE MERGER -- Background of the Merger" for a more detailed
description of the Second Order and the Share Calculation Letter and " Interests
of Certain Persons in the Merger" for a more detailed description of the Change
in Control Agreements.
RECOMMENDATION OF BOARD OF DIRECTORS
First Federal's Board of Directors believes that the Merger is in the best
interests of First Federal and its stockholders and has unanimously approved the
Agreement and the transactions contemplated thereby. FIRST FEDERAL'S BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY. FOR A DISCUSSION OF THE
FACTORS CONSIDERED BY THE FIRST FEDERAL BOARD OF DIRECTORS IN REACHING ITS
CONCLUSIONS, SEE "THE MERGER -- FIRST FEDERAL REASONS FOR THE MERGER."
OPINION OF FIRST FEDERAL'S FINANCIAL ADVISOR
Interstate/Johnson Lane Corporation ("Interstate/Johnson Lane"), which has
served as financial advisor to First Federal, has rendered its opinion to the
First Federal Board of Directors that the consideration to be received by
stockholders of First Federal upon consummation of the Merger is fair, from a
financial point of view, to the stockholders of First Federal. A copy of a
written confirmation of such opinion, dated the date hereof, is attached hereto
as Appendix A and should be read in its entirety with respect to assumptions
made, matters considered and limitations of the review undertaken by
Interstate/Johnson Lane in rendering such opinion. See "THE MERGER -- Opinion of
First Federal's Financial Advisor."
EFFECTIVE DATE OF THE MERGER
The Merger shall become effective on the date and at the time of
endorsement of the Articles of Combination filed with the OTS or on such other
date that the OTS declares the Merger effective. Unless otherwise mutually
agreed upon in writing by First Federal and NationsBank, the Effective Date
shall be as soon as practicable following the date that all of the conditions
precedent specified in the Agreement have been satisfied or waived by the party
permitted to do so pursuant to the terms of the Agreement. See "THE
MERGER -- Effective Date of the Merger" and " -- Conditions to the Merger."
COMPARISON OF NATIONSBANK COMMON STOCK AND FIRST FEDERAL COMMON STOCK
The rights of NationsBank shareholders and other corporate matters relating
to NationsBank Common Stock are controlled by the NationsBank Restated Articles
of Incorporation (the "NationsBank Articles") and Amended and Restated Bylaws
(the "NationsBank Bylaws") and by the North Carolina Business Corporation Act
(the "NCBCA"). The rights of First Federal stockholders and other corporate
matters relating to First Federal Common Stock are controlled by the Charter and
Bylaws of First Federal and by federal law. Upon consummation of the Merger,
stockholders of First Federal will become shareholders of NationsBank whose
rights will be governed by the NationsBank Articles and the NationsBank Bylaws
and by the provisions of the NCBCA. See "COMPARISON OF NATIONSBANK COMMON STOCK
AND FIRST FEDERAL COMMON STOCK."
7
<PAGE>
MODIFICATION, WAIVER AND TERMINATION; EXPENSES
The Agreement provides that to the extent permitted by law, it may be
amended by a subsequent writing signed by NationsBank and First Federal upon the
approval of each of their respective Boards of Directors. However, the
provisions of the Agreement relating to the manner or basis in which shares of
First Federal Common Stock will be exchanged for NationsBank Common Stock shall
not be amended after the Special Meeting without the requisite approval of the
holders of the outstanding shares of First Federal Common Stock, and no
amendment to the Agreement shall modify the requirements relating to the
requisite regulatory approval and other action necessary to authorize the
execution, delivery and performance of the Agreement and the consummation of the
transactions contemplated thereby. See "THE MERGER -- Conditions to the Merger"
and " -- Bank Regulatory Matters." The Agreement provides that each party may
waive any default in the performance of any term of the Agreement, waive or
extend the time for the compliance or fulfillment of any obligations under the
Agreement and waive any of the conditions precedent to the Agreement, except any
condition which, if not satisfied, would result in the violation of any law or
applicable governmental regulation.
The Agreement may be terminated by majority vote of the Board of Directors
of both First Federal and NationsBank. The Agreement may also be terminated by
the majority vote of the Board of Directors of either First Federal or
NationsBank (i) in the event of a material breach of the Agreement by the other
party of any representation, warranty, covenant or agreement which cannot or has
not been cured within 30 days after written notice of such breach; (ii) if (a)
the approval of any governmental or other regulatory authority shall have been
denied by final non-appealable action or if any such action by such authority is
not appealed within the time limit for appeal or (b) the required approval of
the First Federal stockholders is not obtained; or (iii) in the event of the
acquisition of 40% or more of the outstanding shares of common stock of the
other party or the Board of Directors of the other party accepts or publicly
recommends acceptance of an offer from a third party to acquire 50% or more of
its common stock or consolidated assets.
In the Agreement, each of the parties has agreed to bear and pay all costs
and expenses incurred by it or on its behalf in connection with the transactions
contemplated by the Agreement, except for instances in which the Agreement is
terminated by First Federal for the reasons set forth in clauses (i) or (ii) (a)
of the preceding paragraph or by NationsBank for the reasons set forth in clause
(ii) (a) of the preceding paragraph, in which instances NationsBank shall
reimburse First Federal for any and all of the reasonable expenses incurred by
First Federal in attempting to effect the transactions contemplated by the
Agreement. Furthermore, if the Agreement is terminated by the willful breach of
a party, such party shall pay all reasonable expenses of the non-breaching party
incurred by such non-breaching party in attempting to effect the transactions
contemplated by the Agreement. Furthermore, the parties have agreed to each pay
one-half of the printing cost of this Proxy Statement-Prospectus and related
materials.
See "THE MERGER -- Modification, Waiver and Termination; Expenses."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Merger is intended to qualify as a reorganization under Sections
368(a)(1)(A) and 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended
(the "Code"). King & Spalding, special tax counsel to First Federal, has
delivered an opinion to the effect that no gain or loss will be recognized by
the First Federal stockholders as a result of the Merger to the extent that they
receive NationsBank Common Stock solely in exchange for their First Federal
Common Stock.
For a more complete description of the federal income tax consequences, see
"THE MERGER -- Certain Federal Income Tax Consequences."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of First Federal's management and Board of Directors may be
deemed to have interests in the Merger in addition to their interests, if any,
as stockholders of First Federal generally. Those interests include the Change
in Control Agreements, which provide for severance pay and other benefits to be
paid to Ben T. Slade III, Chairman of the Board and President of First Federal,
James H. Gash, Senior Vice President, John J. Rogers, Senior Vice President, and
Robert B. Sams, Vice President, upon the occurrence of a merger or other change
in control, including the Merger.
See "THE MERGER -- Interests of Certain Persons in the Merger."
ABSENCE OF DISSENTERS' RIGHTS
Holders of First Federal Common Stock are not entitled to any rights of
appraisal or other dissenters' rights with respect to the Merger. See "THE
MERGER -- Absence of Dissenters' Rights."
8
<PAGE>
ACCOUNTING TREATMENT
It is intended that the Merger will be accounted for by the purchase method
of accounting under generally accepted accounting principles. See "THE
MERGER -- Accounting Treatment."
REGULATORY APPROVALS
The Merger has been approved by the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board") and the OTS. The Merger also is
subject to the approval of the Georgia Department of Banking and Finance (the
"State Authority"). NationsBank and First Federal have filed all required
applications for regulatory review and approval or notice with the State
Authority in connection with the Merger. There can be no assurance that such
approval will be obtained or as to the date of any such approval. See "THE
MERGER -- Conditions to the Merger" and " -- Bank Regulatory Matters."
RESALES BY AFFILIATES
The Agreement provides that First Federal will use its best efforts to
cause each person who is identified by it as an affiliate to deliver to
NationsBank written agreement providing that such person will not sell, pledge,
transfer or otherwise dispose of the shares of First Federal Common Stock held
by such person except as contemplated by such agreement and will not sell,
pledge, transfer or otherwise dispose of the shares of NationsBank Common Stock
to be received by such person upon consummation of the Merger except in
compliance with applicable provisions of the Securities Act and the rules and
regulations thereunder and until such time as the financial results covering at
least 30 days of combined operations of First Federal and NationsBank have been
published within the meaning of Section 201.01 of the Securities and Exchange
Commission's Codification of Financial Reporting Policies. NationsBank shall not
be required to maintain the effectiveness of the Registration Statement under
the Securities Act for the purposes of resale of NationsBank Common Stock by
such affiliates. See "THE MERGER -- Restrictions on Resales by Affiliates."
SHARE INFORMATION AND MARKET PRICES
The NationsBank Common Stock is listed on the NYSE and the PSE under the
symbol "NB." The NationsBank Common Stock is also listed on the LSE and certain
shares are listed on the Tokyo Stock Exchange. As of December 31, 1996, there
were 573,492,308 shares of NationsBank Common Stock outstanding held by
approximately 106,345 holders of record. The First Federal Common Stock is
included for quotation in The Nasdaq Stock Market as a National Market System
security under the trading symbol "FFBG." As of the Record Date, there were
1,530,250 shares of First Federal Common Stock outstanding held by approximately
531 holders of record.
The following table sets forth the last sales price reported on the NYSE
Composite Transactions List for shares of NationsBank Common Stock on October
10, 1996, the last trading day preceding the Second Order, and on March ,
1997. It also sets forth the last reported sales price per share reported by The
Nasdaq Stock Market for shares of First Federal Common Stock on October 10, 1996
and on March , 1997. The First Federal Equivalent represents the last sales
price of a share of NationsBank Common Stock on such date multiplied by the
Exchange Ratio.
<TABLE>
<CAPTION>
FIRST FEDERAL
NATIONSBANK FIRST FEDERAL EQUIVALENT
<S> <C> <C> <C>
October 10, 1996.................................................................... $ 43.75 $ 72.00 $ 70.00
March , 1997...................................................................... $ $ $
</TABLE>
For additional information regarding the market prices of the NationsBank
Common Stock and First Federal Common Stock during the previous two years, see
"PRICE RANGE OF COMMON STOCK AND DIVIDENDS."
RECENT DEVELOPMENTS
ACQUISITION OF BOATMEN'S BANCSHARES, INC. On January 7, 1997, NationsBank
completed the acquisition of Boatmen's Bancshares, Inc., a corporation organized
and existing under the laws of the State of Missouri and registered as a bank
holding company under the BHCA. Pursuant to an Agreement and Plan of Merger
dated August 29, 1996, Boatmen's was merged into a wholly owned subsidiary of
NationsBank (the "Boatmen's Acquisition"). As permitted by the terms of the
Boatmen's Acquisition, common shareholders of Boatmen's elected to receive an
aggregate of approximately 196 million shares of NationsBank Common Stock (96%
of total consideration paid by NationsBank) and an aggregate of approximately
$372 million in cash (4% of total consideration) in exchange for the shares of
Boatmen's common stock. NationsBank intends to continue its program of
repurchasing shares of NationsBank Common Stock so that the net shares of
NationsBank
9
<PAGE>
Common Stock issued in connection with the Boatmen's Acquisition represent 60%
of the total consideration paid by NationsBank in the Boatmen's Acquisition.
In addition, (i) each share of Cumulative Convertible Preferred Stock,
Series A, of Boatmen's (the "Boatmen's Series A Preferred Stock") was converted
into one share of NationsBank's Cumulative Convertible Preferred Stock, Series A
(the "NationsBank New Series A Preferred Stock"); (ii) each share of 7%
Cumulative Redeemable Preferred Stock, Series B, of Boatmen's (the "Boatmen's
Series B Preferred Stock") was converted into one share of NationsBank's 7%
Cumulative Redeemable Preferred Stock, Series B (the "NationsBank New Series B
Preferred Stock"); and (iii) each depositary share relating to the Boatmen's
Series A Preferred Stock (the "Boatmen's Depositary Shares") was converted into
one depositary share of NationsBank (the "NationsBank Depositary Shares"). The
NationsBank New Series A Preferred Stock, NationsBank New Series B Preferred
Stock and NationsBank Depositary Shares have rights, preferences and terms
substantially identical to the rights, preferences and terms of the Boatmen's
Series A Preferred Stock, Boatmen's Series B Preferred Stock and Boatmen's
Depositary Shares, respectively.
The Boatmen's Acquisition constituted a tax-free reorganization under the
Code and was accounted for as a purchase. At December 31, 1996, Boatmen's had
total assets of $41 billion and had over 600 banking offices in Missouri,
Kansas, Arkansas, Oklahoma, New Mexico, Texas, Iowa, Illinois and Tennessee.
For additional information regarding the Boatmen's Acquisition, see
NationsBank's Current Report on Form 8-K filed September 6, 1996, as amended by
Form 8-K/A-1 filed September 11, 1996, Form 8-K/A-2 filed November 13, 1996, and
Form 8-K filed December 17, 1996, incorporated herein by reference.
RECENT NATIONSBANK FINANCIAL INFORMATION. NationsBank had net income for
1996 of $2.38 billion, a 22% increase over 1995 net income of $1.95 billion.
Earnings per share of common stock for 1996 were $4.00, compared to $3.56 per
share in 1995 (restated to reflect the 2-for-1 stock split effective February
27, 1997). For the fourth quarter of 1996, the net income was $632 million, or
$1.09 per share, as compared to $510 million, or $.94 per share, in the fourth
quarter of 1995.
Taxable-equivalent net interest income increased 16% in 1996 to $6.42
billion. The net interest yield in 1996 was 3.62%, compared to 3.33% in 1995.
Noninterest income increased 18% to $3.65 billion in 1996, compared to $3.08
billion in 1995, due primarily to higher income from investment banking, deposit
accounts and mortgage-related activities. Noninterest expense was $5.67 billion
in 1996, compared to $5.16 billion in 1995, an increase of 10%.
The provision for credit losses increased to $605 million in 1996, compared
to $382 million in 1995. Net charge-offs were $598 million in 1996, or .48% of
average net loans, leases and factored accounts receivable, compared to $421
million, or .38% of average levels in 1995. The allowance for credit losses was
$2.32 billion at December 31, 1996, or 1.89% of net loans, leases and factored
accounts receivable, compared to $2.16 billion at December 31, 1995, or 1.85% of
net loans, leases and factored accounts receivable. The allowance represented
260% of nonperforming loans at December 31, 1996, compared to 306% at December
31, 1995. Total nonperforming assets were $1.04 billion on December 31, 1996, or
.85% of net loans, leases and factored accounts receivables and other real
estate owned, compared to $853 million on December 31, 1995, or .73% of net
levels.
Average loans and leases were $122.3 billion in 1996, a 12% increase over
1995, driven primarily by a 19% increase in average consumer loans. Average
deposits in 1996 were $107.59 billion, compared to $99.28 billion in 1995. On
December 31, 1996, total earning assets were $165.28 billion, of which net loans
and leases were $121.58 billion and securities were $14.39 billion.
Total shareholders' equity was $13.71 billion at December 31, 1996, or
7.38% of total assets. Return on average common shareholder equity was 18.53% in
1996, compared to 17.01% in 1995. Revenue growth outpaced expense growth,
improving the efficiency ratio in 1996 to 56.3%, compared to 59.8% in 1995.
At December 31, 1996, the NationsBank Tier 1 and total risk-based capital
ratios were 7.76% and 12.66%, respectively. The NationsBank's leverage ratio was
7.09% at December 31, 1996. NationsBank and its subsidiaries had issued an
outstanding $16.56 billion of senior debt instruments and $6.13 billion of
subordinated debt instruments at December 31, 1996.
10
<PAGE>
COMPARATIVE UNAUDITED PER SHARE DATA
The following tables set forth (i) selected comparative per share data for
each of NationsBank and First Federal on an historical basis and (ii) selected
unaudited pro forma comparative per share data reflecting the consummation by
NationsBank of (a) the Merger, (b) the Boatmen's Acquisition and (c) the Merger
and the Boatmen's Acquisition. The unaudited pro forma comparative per share
data assume the Merger and the Boatmen's Acquisition had been consummated at the
beginning of the periods presented. The Merger and the Boatmen's Acquisition are
reflected in the unaudited pro forma data using the purchase method of
accounting. For a description of the effect of purchase accounting on the Merger
and the historical financial statements of NationsBank, see "THE
MERGER -- Accounting Treatment." The First Federal pro forma equivalent amounts
are presented with respect to each set of pro forma information, and have been
calculated by multiplying the corresponding pro forma combined amounts per share
of NationsBank Common Stock by the Exchange Ratio.
The unaudited pro forma comparative per share data reflect the Merger and
the Boatmen's Acquisition based upon preliminary purchase accounting
adjustments. Actual adjustments, which may include adjustments to additional
assets, liabilities and other items, will be made on the basis of appraisals and
evaluations as of the Effective Date and, therefore, are likely to differ from
those reflected in the unaudited pro forma comparative per share data.
The unaudited pro forma comparative per share data do not reflect any
direct costs, potential savings or revenue enhancements which are expected to
result from the consolidation of operations of NationsBank, First Federal and
Boatmen's and, therefore, do not purport to be indicative of the results of
future operations.
The comparative per share data presented are based on and derived from, and
should be read in conjunction with, the historical consolidated financial
statements and the related notes thereto of each of NationsBank, Boatmen's and
First Federal incorporated by reference herein. See "AVAILABLE INFORMATION" and
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE." Results of each of
NationsBank and Boatmen's for the nine months ended September 30, 1996 are not
necessarily indicative of results expected for the entire year, nor are pro
forma amounts necessarily indicative of results of operations or combined
financial position that would have resulted had the Merger and the Boatmen's
Acquisition been consummated at the beginning of the period indicated. All
adjustments, consisting of only normal recurring adjustments, necessary for a
fair statement of results of interim periods have been included.
11
<PAGE>
Effective February 27, 1997, NationsBank completed a 2-for-1 split of its
common stock. All financial data has been restated to reflect the impact of the
stock split.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1996 1995
<S> <C> <C>
NATIONSBANK HISTORICAL
Earnings per common share (primary)...................................................... $ 2.91 $ 3.57
Cash dividends per common share.......................................................... .87 1.04
Shareholders' equity per common share (period end)....................................... 22.89 23.26
NATIONSBANK PRO FORMA COMBINED
Earnings per common share (1)
Pro forma combined for the Merger..................................................... 2.90 3.56
Pro forma combined for the Boatmen's Acquisition (2).................................. 2.41 2.89
Pro forma combined for the Merger and the Boatmen's Acquisition (2)................... 2.41 2.88
Cash dividends per common share (3)
Pro forma combined for the Merger..................................................... .87 1.04
Pro forma combined for the Boatmen's Acquisition (2).................................. .87 1.04
Pro forma combined for the Merger and the Boatmen's Acquisition (2)................... .87 1.04
Shareholders' equity per common share (period end)
Pro forma combined for the Merger..................................................... 22.84 23.21
Pro forma combined for the Boatmen's Acquisition (2).................................. 27.19 27.26
Pro forma combined for the Merger and the Boatmen's Acquisition (2)................... 27.14 27.20
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30, 1996
<S> <C>
FIRST FEDERAL HISTORICAL
Earnings per common share............................................................................... $ 1.42
Cash dividends per common share......................................................................... .93
Shareholders' equity per common share (period end)...................................................... 17.29
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1996 1995
<S> <C> <C>
FIRST FEDERAL PRO FORMA EQUIVALENT (4)
Earnings per common share
Pro forma equivalent for the Merger........................................................ $ 2.32 $ 2.84
Pro forma equivalent for the Boatmen's Acquisition (2)..................................... 1.93 2.31
Pro forma equivalent for the Merger and the Boatmen's Acquisition (2)...................... 1.92 2.30
Cash dividends per common share
Pro forma equivalent for the Merger........................................................ 0.70 .83
Pro forma equivalent for the Boatmen's Acquisition (2)..................................... 0.70 .83
Pro forma equivalent for the Merger and the Boatmen's Acquisition (2)...................... 0.70 .83
Shareholders' equity per common share (period end)
Pro forma equivalent for the Merger........................................................ 18.27 18.57
Pro forma equivalent for the Boatmen's Acquisition (2)..................................... 21.75 21.80
Pro forma equivalent for the Merger and the Boatmen's Acquisition (2)...................... 21.86 21.61
</TABLE>
12
<PAGE>
(1) For purposes of preparing pro forma combined per share information, First
Federal's operating results for the nine months ended September 30, 1996 and
the year ended September 30, 1995 were combined with NationsBank's operating
results for the nine months ended September 30, 1996 and the year ended
December 31, 1995, respectively.
(2) A cash election of 40% in the Boatmen's Acquisition has been assumed. An
actual cash election of approximately 4% was made by the holders of
Boatmen's common stock. However, NationsBank currently expects to repurchase
shares of NationsBank Common Stock from time to time so that the pro forma
impact of the Boatmen's Acquisition will be the issuance of approximately
60% of the aggregate consideration in NationsBank Common Stock and 40% of
the aggregate consideration in cash. See "SUMMARY -- Recent Developments;
Acquisition of Boatmen's Bancshares, Inc." For additional pro forma
information regarding the Boatmen's Acquisition, see the NationsBank
Current Report on Form 8-K/A-2 filed on November 13, 1996.
(3) Pro forma combined dividends per share represent historical dividends per
share paid by NationsBank.
(4) Pro forma equivalent amounts for the Merger are calculated by multiplying
the pro forma combined amounts by the Exchange Ratio. See "THE
MERGER -- Background of The Merger; Share Calculation Letter."
SELECTED FINANCIAL DATA
The following tables present (i) summary selected financial data for each
of NationsBank and First Federal on an historical basis and (ii) summary
unaudited pro forma selected financial data reflecting the consummation of the
Boatmen's Acquisition. The unaudited pro forma selected financial data have been
prepared giving effect to the Boatmen's Acquisition using the purchase method of
accounting.
The summary unaudited pro forma selected financial data for NationsBank
reflecting the acquisition of Boatmen's is based on and derived from, and should
be read in conjunction with, the historical consolidated financial statements
and the related notes thereto of each of NationsBank and Boatmen's, which are
incorporated herein by reference.
The summary unaudited pro forma selected financial data reflect the
Boatmen's Acquisition based upon preliminary purchase accounting adjustments.
Actual adjustments, which may include adjustments to additional assets,
liabilities and other items, will be made on the basis of appraisals and
evaluations as of the effective date thereof and, therefore, is likely to differ
from those reflected in the summary unaudited pro forma selected financial data.
NationsBank and Boatmen's expect that the combined company will achieve
substantial benefits from the Boatmen's Acquisition, including operating costs
savings and revenue enhancements. However, the summary unaudited pro forma
selected financial data does not reflect any direct costs, potential savings or
revenue enhancements, which are expected to result from the consolidation of
operations of NationsBank and Boatmen's and, therefore, does not purport to be
indicative of the results of future operations.
The summary selected financial data are based on and derived from, and
should be read in conjunction with, the historical consolidated financial
statements and the related notes thereto of each of NationsBank and First
Federal incorporated by reference herein. Results of NationsBank for the nine
months ended September 30, 1996 and for First Federal for the three months ended
December 31, 1996 are not necessarily indicative of results expected for the
entire year, nor are pro forma amounts necessarily indicative of results of
operations or combined financial position that would have resulted had the
Boatmen's Acquisition been consummated at the beginning of the period indicated.
All adjustments, consisting of only normal recurring adjustments, necessary for
a fair statement of results of interim periods have been included.
13
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF NATIONSBANK
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
1996 1995 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN MILLIONS, EXCEPT PER-SHARE INFORMATION AND RATIOS)
Income statement
Income from earning assets......................... $ 10,438 $ 9,859 $ 13,220 $ 10,529 $ 8,327 $ 7,780 $ 9,398
Interest expense................................... 5,699 5,825 7,773 5,318 3,690 3,682 5,599
Net interest income................................ 4,739 4,034 5,447 5,211 4,637 4,098 3,799
Provision for credit losses........................ 455 240 382 310 430 715 1,582
Gains (losses) on sales of securities.............. 34 8 29 (13) 84 249 454
Noninterest income................................. 2,688 2,232 3,078 2,597 2,101 1,913 1,742
Merger-related charge.............................. 118 -- -- -- 30 -- 330
Noninterest expense (including OREO expense)....... 4,212 3,831 5,181 4,930 4,371 4,149 3,974
Income before income taxes and effect of change in
method of accounting for income taxes............ 2,676 2,203 2,991 2,555 1,991 1,396 109
Income tax expense (benefit)....................... 933 763 1,041 865 690 251 (93)
Net income......................................... 1,743 1,440 1,950 1,690 1,501(1) 1,145 202
Net income applicable to common shareholders....... 1,732 1,434 1,942 1,680 1,491(1) 1,121 171
Per common share
Net income (primary)............................... $ 2.91 $ 2.63 $ 3.56 $ 3.06 $ 2.89(1) $ 2.30 $ .38
Net income (fully diluted)......................... 2.87 2.60 3.52 3.03 2.86(1) 2.26 .37
Cash dividends paid................................ .87 .75 1.04 .94 .82 .76 .74
Shareholders' equity (period end).................. 22.89 22.00 23.26 19.85 18.20 15.40 13.52
Balance sheet (period end)
Total assets....................................... $187,671 $182,138 $187,298 $169,604 $157,686 $118,059 $110,319
Total loans, leases and factored accounts
receivable, net of unearned income............... 122,078 114,601 117,033 103,371 92,007 72,714 69,108
Total deposits..................................... 108,132 97,870 100,691 100,470 91,113 82,727 88,075
Long-term debt..................................... 22,034 15,741 17,775 8,488 8,352 3,066 2,876
Common shareholders' equity........................ 13,186 11,904 12,759 10,976 9,859 7,793 6,252
Total shareholders' equity......................... 13,304 11,941 12,801 11,011 9,979 7,814 6,518
Common shares outstanding at period end
(in thousands)..................................... 576,224 541,080 548,538 552,904 541,810 505,980 462,492
Performance ratios
Return on average assets........................... 1.15%(2) 1.03%(2) 1.03% 1.02% .97% 1.00% .17%
Return on average common shareholders' equity
(3).............................................. 17.58(2) 17.02(2) 17.01 16.10 15.00 15.83 2.70
Risk-based capital ratios
Tier 1............................................. 7.05 7.16 7.24 7.43 7.41 7.54 6.38
Total.............................................. 12.05 11.23 11.58 11.47 11.73 11.52 10.30
Leverage capital ratio............................... 6.30 5.96 6.27 6.18 6.00 6.16 5.07
Total equity to total assets......................... 7.09 6.56 6.83 6.49 6.33 6.62 5.91
Asset quality ratios Allowance for credit losses as a
percentage of total loans, leases and factored
accounts receivable, net of unearned income (period
end)............................................... 1.90 1.89 1.85 2.11 2.36 2.00 2.32
Allowance for credit losses as a percentage of
nonperforming loans (period end)................. 235.64 255.57 306.49 273.07 193.38 103.11 81.82
Net charge-offs as a percentage of average loans,
leases and factored accounts receivable, net of
unearned income.................................. .48(2) .33(2) .38 .33 .51 1.25 1.86
Nonperforming assets as a percentage of net loans,
leases, factored accounts receivable, net of
unearned income, and other real estate owned
(period end)..................................... .93 .90 .73 1.10 1.92 2.72 4.01
</TABLE>
(1) Includes cumulative effect benefit of $200 million for the adoption of SFAS
109. The effect on primary and fully diluted earnings per share was $.39 and
$.385, respectively, for the year ended December 31, 1993.
(2) Annualized.
(3) Average common shareholders' equity does not include the effect of market
value adjustments to securities available for sale and marketable equity
securities.
14
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF FIRST FEDERAL
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
DECEMBER 31, YEAR ENDED SEPTEMBER 30,
1996 1995 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN MILLIONS, EXCEPT PER-SHARE INFORMATION)
Income statement
Income from earning assets...................................... $ 5 $ 5 $ 20 $ 19 $ 17 $ 17 $ 19
Interest expense................................................ 2 3 10 9 8 8 11
Net interest income.......................................... 3 2 10 10 9 9 8
Noninterest income.............................................. 1 1 3 2 2 2 3
Noninterest expense............................................. 2 2 10 7 7 7 7
Income before income taxes...................................... 2 1 3 5 4 4 4
Income tax expense.............................................. 1 -- 1 2 1 1 2
Net income...................................................... 1 1 2(1) 3 3 3 2
Per common share
Net income (loss)............................................... $ .64 $ .47 $1.42(1) $2.05 $2.17 $1.77 $1.50
Cash dividends declared......................................... .19 .36 .93 .89 .75 .61 .58
Balance sheet (period end)
Total assets.................................................... $ 254 $ 264 $ 249 $ 253 $ 232 $ 228 $ 221
Total loans, net of unearned discount........................... 219 195 210 187 179 173 158
Total deposits.................................................. 220 222 218 223 201 197 192
Long-term debt.................................................. 2 2 2 2 4 5 3
Shareholders' equity............................................ 27 26 26 26 24 22 20
Common shares outstanding at period end (in thousands)............ 1,500 1,500 1,500 1,500 1,498 1,497 1,497
</TABLE>
(1) Fiscal year 1996 results included a charge of approximately $1.4 million,
representing a provision made for the payment of a special assessment
imposed by Congress for the purpose of recapitalizing the thrift portion of
the Federal Deposit Insurance Fund. This charge reduced fiscal year 1996 net
income by approximately $1 million, or $.58 per share.
15
<PAGE>
SELECTED PRO FORMA FINANCIAL DATA FOR NATIONSBANK
REFLECTING THE BOATMEN'S ACQUISITION (1)
(DOLLARS IN MILLIONS, EXCEPT PER-SHARE INFORMATION AND RATIOS)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1996 1995
<S> <C> <C>
INCOME STATEMENT
Income from earning assets.................................................................... $ 12,110 $ 15,450
Interest expense.............................................................................. 6,445 8,838
Net interest income......................................................................... 5,665 6,612
Provision for credit losses................................................................... 520 442
Gains on sales of securities.................................................................. 36 22
Noninterest income............................................................................ 3,320 3,840
Merger-related charge......................................................................... 178 --
Noninterest expense (including OREO expense).................................................. 5,525 6,924
Income before income taxes.................................................................... 2,798 3,108
Income tax expense............................................................................ 1,043 1,161
Net income.................................................................................... 1,755 1,947
Net income applicable to common shareholders.................................................. 1,739 1,932
Per common share
Net income (primary).......................................................................... $ 2.41 $ 2.89
Net income (fully diluted).................................................................... 2.39 2.86
Cash dividends paid (2)....................................................................... .87 1.04
Shareholders' equity (period end)............................................................. 27.19 27.26
Balance sheet (period end)
Total assets.................................................................................. $ 224,756 $ 224,803
Total loans, leases and factored accounts receivable, net of unearned income.................. 146,393 141,084
Total deposits................................................................................ 138,694 132,669
Long-term debt................................................................................ 26,533 22,285
Common shareholders' equity................................................................... 18,973 18,263
Total shareholders' equity.................................................................... 19,182 18,682
Common shares outstanding period end (in thousands)............................................. 697,790 670,104
Performance ratios
Return on average assets...................................................................... 0.98%(2) 0.86%
Return on average common shareholders' equity (4)............................................. 12.19(3) 11.37
Risk-based capital ratios (5)
Tier 1........................................................................................ 5.57 5.64
Total......................................................................................... 10.20 10.26
Leverage capital ratio.......................................................................... 5.03 4.94
Total equity to total assets.................................................................... 8.53 8.31
Asset quality ratios
Allowance for credit losses as a percentage of total loans, leases and factored accounts
receivable, net of unearned income (period end)............................................. 1.91 1.85
Allowance for credit losses as a percentage of nonperforming loans (period end)............... 242.60 297.50
Net charge-off's as a percentage of average loans, leases and factored accounts receivable,
net of unearned income...................................................................... 0.45(3) 0.36
Nonperforming assets as a percentage of net loans, leases, factored accounts receivable, net
of unearned income, and other real estate owned (period end)................................ 0.91 0.75
</TABLE>
(1) A cash election of 40% in the Boatmen's Acquisition has been assumed. An
actual cash election of approximately 4% was made by the holders of
Boatmen's common stock. However, NationsBank currently expects to repurchase
shares of NationsBank Common Stock from time to time so that the pro forma
impact of the Boatmen's Acquisition will be the issuance of approximately
60% of the aggregate consideration in NationsBank Common Stock and 40% of
the aggregate consideration in cash. See "SUMMARY -- Recent Developments;
Acquisition of Boatmen's Bancshares, Inc." For additional pro forma
information regarding the Boatmen's Acquisition, see the
NationsBank Current Report on Form 8-K/A-2 filed on November 13, 1996.
(2) Pro forma combined dividends per common share represent the historical
dividends per common share paid by NationsBank.
(3) Annualized.
(4) Average common shareholders' equity does not include the effect of market
value adjustments to securities available for sale and marketable equity
securities.
(5) NationsBank and Boatmen's expect the combined company to be well capitalized
under regulatory guidelines. Not included in the above capital ratios are
fourth quarter earnings net of dividends and the issuance of approximately
$1 billion of qualifying Tier 1 capital. See "SUMMARY -- Recent
Developments; Recent NationsBank Financial Information."
16
<PAGE>
THE SPECIAL MEETING OF STOCKHOLDERS OF FIRST FEDERAL
GENERAL
This Proxy Statement-Prospectus is first being mailed to the holders of
First Federal Common Stock on or about March 14, 1997, and is accompanied by the
notice of Special Meeting and a form of proxy that is solicited by the Board of
Directors of First Federal for use at the Special Meeting of Stockholders of
First Federal to be held on April 11, 1997 and at any adjournments or
postponements thereof. The purpose of the Special Meeting is to take action with
respect to the approval of the Agreement and the transactions contemplated
thereby.
PROXIES
A stockholder of First Federal may use the accompanying proxy if such
stockholder is unable to attend the Special Meeting in person or wishes to have
his or her shares voted by proxy even if such stockholder does attend the
meeting. A stockholder may revoke any proxy given pursuant to this solicitation
by delivering to the President of First Federal, prior to or at the Special
Meeting, a written notice revoking the proxy or a duly executed proxy relating
to the same shares bearing a later date, or by voting in person at the Special
Meeting. All written notices of revocation and other communications with respect
to the revocation of First Federal proxies should be addressed to First Federal
Savings Bank of Brunswick, Georgia, 777 Gloucester Street, Brunswick, Georgia
31520, Attention: Ben T. Slade III, President. For such notice of revocation or
later proxy to be valid, however, it must actually be received by First Federal
prior to the vote of the stockholders.
All shares represented by valid proxies received pursuant to the
solicitation, and not revoked before they are exercised, will be voted in the
manner specified therein. If no specification is made, the proxies will be voted
in favor of approval of the Agreement. The Board of Directors of First Federal
is unaware of any other matters that may be presented for action at the Special
Meeting. If other matters do properly come before the Special Meeting, however,
it is intended that shares represented by proxies in the accompanying form will
be voted or not voted by the persons named in the proxies in their discretion.
If there are not sufficient votes to approve the Agreement at the Special
Meeting, the proxy holder may vote in favor of a proposal to adjourn the Special
Meeting to permit further solicitation of proxies.
SOLICITATION OF PROXIES
Solicitation of proxies may be made in person or by mail, telephone or
facsimile, by directors, officers and employees of First Federal, who will not
be specially compensated for such solicitation. Nominees, fiduciaries and other
custodians will be requested to forward solicitation materials to beneficial
owners and to secure their voting instructions, if necessary, and will be
reimbursed for the expenses incurred in sending proxy materials to beneficial
owners. All costs of solicitation of proxies from First Federal stockholders
will be borne by First Federal; provided, however, that NationsBank and First
Federal have each agreed to pay one-half of the printing cost of this Proxy
Statement-Prospectus and related materials.
RECORD DATE AND VOTING RIGHTS
First Federal's Board of Directors has fixed the close of business on March
3, 1997, as the Record Date for determination of stockholders of First Federal
entitled to receive notice of and to vote at the Special Meeting. At the close
of business on the Record Date, there were outstanding 1,530,250 shares of First
Federal Common Stock held by approximately 531 holders of record. Each share of
First Federal Common Stock outstanding on the Record Date is entitled to one
vote as to (i) the approval of the Agreement and the transactions contemplated
thereby, and (ii) any other proposal that may properly come before the Special
Meeting. Approval of the Agreement will require the affirmative vote of the
holders of at least two-thirds of the issued and outstanding First Federal
Common Stock entitled to vote at the Special Meeting. As of the Record Date, the
directors and executive officers of First Federal and their affiliates
beneficially owned an aggregate of 430,923 shares, or 28.16%, of First Federal
Common Stock entitled to vote at the Special Meeting. All such directors and
executive officers have indicated that they intend to vote such shares in favor
of the Agreement, although they are not obligated to do so. Included in the
shares of First Federal Common Stock beneficially owned by First Federal's
directors and executive officers and their affiliates are 25,058 shares held by
First Federal's profit sharing plan. The voting power over those shares is held
by three of First Federal's directors in their capacities as trustees for the
plan. These directors have indicated that they intend to vote those shares in
favor of the Agreement. None of the directors or executive officers, or their
affiliates, of NationsBank owned any shares of First Federal Common Stock as of
the Record Date.
BECAUSE APPROVAL OF THE AGREEMENT REQUIRES THE AFFIRMATIVE VOTE OF THE
HOLDERS OF AT LEAST TWO-THIRDS OF THE OUTSTANDING SHARES OF FIRST FEDERAL COMMON
STOCK, ABSTENTIONS AND BROKER NON-VOTES WILL HAVE THE SAME EFFECT AS NEGATIVE
VOTES. ACCORDINGLY,
17
<PAGE>
THE BOARD OF DIRECTORS OF FIRST FEDERAL URGES ITS STOCKHOLDERS TO COMPLETE, DATE
AND SIGN THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED,
POSTAGE-PAID ENVELOPE.
RECOMMENDATION OF FIRST FEDERAL BOARD OF DIRECTORS
First Federal's Board of Directors believes that the Merger is in the best
interests of First Federal and its stockholders and has unanimously approved the
Agreement and the transactions contemplated thereby. FIRST FEDERAL'S BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY. See "THE
MERGER -- Background of the Merger" and " -- First Federal Reasons for the
Merger."
THE MERGER
THE FOLLOWING SUMMARY OF CERTAIN TERMS AND PROVISIONS OF THE AGREEMENT IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE AGREEMENT, WHICH IS INCORPORATED
HEREIN BY REFERENCE AND IS INCLUDED IN THE EXHIBITS FILED WITH THE REGISTRATION
STATEMENT, OF WHICH THIS PROXY STATEMENT-PROSPECTUS IS A PART.
DESCRIPTION OF THE MERGER
At the Effective Date, subject to the terms of the Agreement, Merger Sub
will merge with and into First Federal, the separate corporate existence of
Merger Sub will cease and First Federal will survive and continue to exist and
to be governed by the laws of the United States as a federal stock savings bank
operating under the name First Federal Savings Bank of Brunswick, Georgia and as
a wholly owned subsidiary of NationsBank. Each executive officer and each
director of First Federal has submitted his resignation as such, effective
immediately upon consummation of the Merger, and NationsBank is expected to fill
those positions, in its discretion, immediately thereafter. The Merger is
subject to the approvals of the Federal Reserve Board, the OTS and the State
Authority. See "THE MERGER -- Bank Regulatory Matters."
All of the shares of NationsBank Common Stock issued and outstanding on the
Effective Date shall remain issued and outstanding after the Effective Date and
shall be unaffected by the Merger. Each outstanding share of Merger Sub common
stock shall be converted into one share of First Federal Common Stock. The
outstanding shares of First Federal Common Stock will be converted into an
aggregate of 2,448,400 shares of NationsBank Common Stock which equates to an
Exchange Ratio of 1.60 shares of NationsBank Common Stock for each share of
First Federal Common Stock. Cash will be paid in lieu of any resulting
fractional shares of NationsBank Common Stock.
No fractional shares of NationsBank Common Stock will be issued as a result
of the Merger. Each holder of First Federal Common Stock who would otherwise be
entitled to receive a fraction of a share of NationsBank Common Stock (after
taking into account all of the stockholder's certificates) will receive, in lieu
thereof, the equivalent cash value of such fractional share based upon the Base
Period Trading Price.
In the event NationsBank changes the number of shares of NationsBank Common
Stock issued and outstanding prior to the Effective Date as a result of a stock
split, stock dividend, or similar recapitalization, the Exchange Ratio will be
adjusted to appropriately adjust the ratio under which shares of First Federal
Common Stock will be converted into and exchanged for shares of NationsBank
Common Stock.
Consummation of the Merger is subject to several conditions, including,
among others, the approval of the stockholders of First Federal and the approval
of appropriate regulatory agencies. The Merger will be effected by filing the
Plan of Merger as part of the Articles of Combination executed by First Federal
and Merger Sub with the OTS. See "THE MERGER -- Conditions to the Merger."
EFFECTIVE DATE OF THE MERGER
The Merger shall become effective on the date and at the time of
endorsement of the Articles of Combination filed with the OTS or on such other
date that the OTS declares the Merger effective. Unless otherwise mutually
agreed upon in writing by First Federal and NationsBank, the Effective Date
shall be as soon as practicable following the date that all of the conditions
precedent specified in the Agreement have been satisfied or waived by the party
permitted to do so pursuant to the terms of the Agreement.
18
<PAGE>
EXCHANGE OF CERTIFICATES
As soon as practicable after the Effective Date, but in no event later than
two business days after the Effective Date, a form of transmittal letter
("Transmittal Letter") pursuant to which each holder of shares of First Federal
Common Stock may transmit certificates representing shares of First Federal
Common Stock in exchange for shares of NationsBank Common Stock in accordance
with the Exchange Ratio, and any other appropriate materials, shall be mailed by
NationsBank or the exchange agent selected by NationsBank, to each holder of
record of First Federal Common Stock as of the Effective Date.
After the Effective Date, each holder of shares of First Federal Common
Stock issued and outstanding on the Effective Date shall surrender the
certificate or certificates representing such shares, together with a properly
completed Transmittal Letter, to the exchange agent selected by NationsBank and
shall promptly upon surrender receive in exchange therefor shares of NationsBank
Common Stock in accordance with the Exchange Ratio. The certificate or
certificates of First Federal Common Stock so surrendered shall be duly endorsed
as NationsBank or the exchange agent may require. No fractional shares of
NationsBank Common Stock will be issued as a result of the Merger. Each holder
of shares of First Federal Common Stock issued and outstanding on the Effective
Date also shall receive, upon surrender of the certificate or certificates
representing such shares, cash, without interest, in lieu of any fractional
share of NationsBank Common Stock to which such holder may be entitled.
NationsBank shall not be obligated to deliver the consideration to which any
former holder of First Federal Common Stock is entitled as a result of the
Merger until such holder surrenders his certificate or certificates representing
the shares of First Federal Common Stock for exchange as provided in the
Agreement. In addition, no dividend or other distribution payable to the holders
of record of NationsBank Common Stock as of any time subsequent to the Effective
Date shall be paid to the holder of any certificate representing shares of First
Federal Common Stock issued and outstanding on the Effective Date until such
holder surrenders such certificate for exchange as provided in the Agreement.
Upon surrender of the First Federal Common Stock certificate, however, both the
NationsBank Common Stock certificates (together with all such withheld dividends
or other distributions) and any withheld cash payments (each without interest)
shall be delivered and paid with respect to each share represented by such
certificate. In the event a holder of shares of First Federal Common Stock has
lost such holder's certificate or certificates representing the shares of First
Federal Common Stock held by such holder, such holder shall comply with the
policies and procedures of the exchange agent for lost certificates prior to
receiving the consideration to which the holder is entitled as provided in the
Agreement. After the Effective Date each outstanding certificate that
represented shares of First Federal Common Stock prior to the Effective Date
shall be deemed for all corporate purposes (other than the payment of dividends
and other distributions to which the former stockholders of First Federal may be
entitled) to evidence only the right of the holder thereof to receive the
consideration in exchange therefor provided for in the Agreement.
BACKGROUND OF THE MERGER
GENERAL. In late 1987, First Federal had discussions concerning the
possible acquisition of First Federal with another thrift institution located in
the State of Georgia, with The Citizens and Southern Corporation, predecessor to
C&S/Sovran ("C&S"), and with one other regional interstate bank holding company.
After the significant decline in market prices that occurred in the stock market
during October 1987, discussions with the thrift institution were terminated.
Thereafter, First Federal pursued merger discussions with C&S and the other
regional interstate bank holding company. First Federal received a written offer
in the form of a letter of intent from C&S and an oral proposal from the other
bank holding company in response to a request for its best and final proposal.
First Federal's Board of Directors determined that the offer from C&S was
financially superior to the oral proposal from the other bank holding company.
C&S and First Federal entered into a letter of intent for the acquisition of
First Federal on February 16, 1988, and began negotiating the terms of a
definitive agreement, which was executed by the parties as of April 19, 1988
(the "Original Agreement").
When the Original Agreement was entered into on April 19, 1988, the parties
thereto contemplated that First Federal would be acquired by C&S through a
merger of First Federal with and into The Citizens and Southern National Bank, a
wholly owned subsidiary of C&S ("CSNB"), after the conversion of First Federal
from a federal stock savings bank to a state-chartered stock savings and loan
association. That structure would have required that First Federal also convert
its insurance of accounts from the Federal Savings and Loan Insurance
Corporation (the "FSLIC") (which then was the insurance fund for federally
chartered thrift institutions) to the FDIC (which then insured only commercial
banks). The acquisition was so structured because statutes and policies then
applicable would not permit C&S to acquire First Federal as a separate thrift
institution, but would permit C&S to so acquire First Federal if First Federal,
in effect, converted to a commercial bank through a merger with CSNB.
19
<PAGE>
Although the structure originally contemplated by the parties would have
permitted C&S to acquire First Federal, the acquisition could not have been
consummated until the expiration of a then one-year moratorium on insurance fund
conversions from the FSLIC to the FDIC, which moratorium was scheduled to expire
on August 10, 1988, but was later extended until August 10, 1989. Congress then
enacted the Financial Institutions Reform, Recovery, and Enforcement Act of 1989
("FIRREA"), which extended the insurance fund conversion moratorium until August
10, 1994. Thus, the structure originally contemplated by the parties for
acquiring First Federal was no longer feasible.
On September 26, 1989, C&S entered into a definitive agreement with Sovran
Financial Corporation ("Sovran"), which provided for the reorganization of C&S
and Sovran into a single entity (I.E., C&S/Sovran) (the "C&S/Sovran
Reorganization"). In light of the enactment of FIRREA and the C&S/Sovran
Reorganization, First Federal and C&S amended and restated the Original
Agreement pursuant to the terms of the Restated Agreement dated as of November
20, 1989, to provide for the acquisition of First Federal by C&S or C&S/Sovran
pursuant to a structure which contemplated that First Federal would remain a
separate thrift subsidiary of C&S or C&S/Sovran. Due to various operational
considerations, the parties further amended, as of August 20, 1990, the Restated
Agreement pursuant to Amendment No. 1 to restructure the proposed acquisition
such that First Federal would be a wholly owned bank subsidiary of C&S/Sovran,
with its deposits insured by the SAIF. As of December 19, 1990, the parties
further amended the Agreement pursuant to Amendment No. 2 to extend the time for
completing the transaction to September 30, 1991. With the exception of
substituting C&S/Sovran common stock for C&S common stock, none of the
amendments to the Original Agreement affected the exchange ratio in the
transaction; they merely changed the structure used to acquire First Federal as
the applicable statutes changed. On July 21, 1991, NationsBank and C&S/Sovran
entered into an agreement pursuant to which C&S/Sovran would become a wholly
owned subsidiary of NationsBank through a stock-for-stock merger. This
acquisition was consummated on December 31, 1991, whereupon NationsBank became a
party to the Litigation as the successor to C&S/Sovran.
LITIGATION. In September 1991, First Federal commenced the Litigation
against C&S/Sovran alleging that C&S/Sovran had breached a merger agreement then
in effect between the parties by failing to consummate the transaction in a
timely fashion. First Federal sought alternative remedies of damages and
specific performance of the agreement unaffected by the alleged breach. Prior to
filing suit, First Federal entered into a contingency fee agreement on September
27, 1991 with the law firm of McAlpin & Henson. This contingency agreement
obligated First Federal to pay a contingency fee to McAlpin & Henson based on
the gross value of the amount recovered from the defendants in excess of a base
value of First Federal. The base value used the definition of "Per Share
Purchase Price" that was included in the original agreement to value First
Federal Common Stock. The contingency percentages were 0% for the first $5
million recovered over the base value, 10% for $5 million to $15 million
recovered, 15% for $15 million to $25 million recovered, and 20% for all amounts
recovered in excess of $25 million over the base value.
As part of the original suit, First Federal sought to have the Defendants
pay the full amount of the contingency under principles of Georgia law. The
Court declined, however, in the Second Order to require NationsBank to pay the
contingent fees and further specified how the payment could be made by First
Federal, as described below.
On December 16, 1994, after a civil jury trial in May 1994 determined that
C&S/Sovran had breached the Agreement, the Court issued the First Order, which
ordered NationsBank to specifically perform under the terms of the Agreement. In
December 1995, the Georgia Supreme Court affirmed the jury verdict and the First
Order. On October 11, 1996, after an advisory jury trial in July 1996 determined
that the transaction should have closed on June 19, 1991 but for the breach of
the Agreement, and following a hearing before the Court in August 1996, the
Court issued the Second Order, which ordered NationsBank to consummate the
merger of NationsBank and First Federal on the basis of a June 1991 closing date
as promptly as possible, consistent with applicable law, and in accordance with
the terms of the Restated Agreement, Amendment No. 1, and Amendment No. 2, as
modified by the Second Order.
The Second Order resolved three issues remaining in the Litigation. First,
it held that the number of shares of NationsBank Common Stock to be offered to
First Federal's stockholders was 2,560,536, plus that number of shares of
NationsBank Common Stock that can be purchased for an amount equal to the
difference between dividends paid on First Federal Common Stock and dividends
paid on C&S/Sovran common stock or NationsBank Common Stock, as appropriate,
since June 19, 1991. The Second Order also held that NationsBank may reduce the
number of shares of NationsBank Common Stock to be offered to First Federal's
stockholders by the amounts paid by First Federal to Messrs. Ben T. Slade, III,
John J. Rogers, James H. Gash and Robert B. Sams under the Change in Control
Agreements. See "THE MERGER -- Interests of Certain Persons in the Merger."
Finally, the Second Order held that First Federal could not recover any of the
contingency payment for its litigation legal fees from NationsBank. The Second
Order did permit First Federal to compensate its litigation attorneys for fees
in connection with the Litigation at a rate of $200 per hour plus a lump sum
enhancement of $250,000
20
<PAGE>
without affecting the number of shares of NationsBank Common Stock to be offered
to First Federal stockholders in the Merger. The Second Order further provided
that the number of shares of NationsBank Common Stock to be offered to First
Federal's stockholders would be reduced by an amount equal to legal fees paid by
First Federal in excess of the foregoing, including fees paid pursuant to the
September 27, 1991 contingency agreement between First Federal and McAlpin &
Henson.
SHARE CALCULATION LETTER. On November 12, 1996, First Federal sent to
NationsBank the Share Calculation Letter, which addresses the method by which
the Second Order will be implemented and advises NationsBank how shares of
NationsBank Common Stock should be paid in the Merger. The Share Calculation
Letter provides as follows:
(a) Because of a computation error, the Second Order incorrectly set
the number of shares of NationsBank Common Stock to be offered to
First Federal stockholders at 2,560,536. The correct number of
shares is 2,564,186.
(b) The aggregate additional amount of legal fees of Whelchel Brown
Readdick & Bumgartner and of McAlpin & Henson (the "Litigation
Attorneys"), calculated at a rate of an additional $25 per hour
above the $175 per hour fee in accordance with the Second Order,
is $213,350. The Court also authorized First Federal to pay the
Litigation Attorneys a lump sum enhancement of $250,000, or an
aggregate of $463,350. Pursuant to the Second Order, payment by
First Federal of this amount does not reduce the number of shares
of NationsBank Common Stock offered to First Federal stockholders.
(c) The Dividend Differential is $7,544,653.
(d) The First Federal Board of Directors determined that the aggregate
amount to be paid to Messrs. Slade, Rogers, Gash and Sams under
the Change in Control Agreements is $1,260,371 and that this
amount will be paid from the proceeds of the Dividend
Differential. The First Federal Board of Directors further
determined that the remainder of the Dividend Differential,
$6,284,282, will be paid to the Litigation Attorneys as additional
compensation.
(e) The amount of the contingency obligation under the September 27,
1991 contingency agreement fluctuates with the market value of
NationsBank Common Stock. On November 12, 1996, the approximate
value of the contingency was $14.9 million. McAlpin & Henson has
agreed to reduce this to an amount equal to the amount described
in paragraph (b) above, plus the remaining Dividend Differential
($6,284,282), plus an amount equal to the market value of 115,786
shares of NationsBank Common Stock (using the average trading
price described in the calculation of the Base Period Trading
Price). On November 12, 1996, the approximate value of the sum of
these amounts was $12.1 million.
(f) Based on the above paragraphs (a) through (e), the First Federal
Board of Directors determined that the First Federal stockholders
will receive 2,448,400 shares of NationsBank Common Stock which
equates to 1.60 shares of NationsBank Common Stock for each share
of First Federal Common Stock.
Neither NationsBank nor its agents have endorsed or participated in any way
in the determinations by the First Federal Board of Directors set forth in the
Share Calculation Letter, as described above in paragraphs (b), (d), (e) and
(f), which were solely the determinations of the First Federal Board of
Directors.
On January 17, 1997, NationsBank and First Federal executed the Waiver
Letter, which provides as follows:
(a) The provisions of Amendment No. 1 are waived in their entirety. As
a result, the Merger will be structured as provided in the
Restated Agreement and as described above in "THE
MERGER -- Description of the Merger."
(b) The provisions of Amendment No. 2 are waived in their entirety in
order to make the timing of the Effective Date consistent with the
Second Order, which provides that NationsBank and First Federal
shall consummate the Merger as promptly as possible consistent
with applicable law.
(c) Except as to those matters specifically addressed in the Waiver
Letter, the waivers contained therein shall not prejudice any
rights of First Federal or NationsBank under the Agreement,
including without limitation the First Order or the Second Order.
NATIONSBANK REASONS FOR THE MERGER
As previously noted, First Federal commenced litigation in September 1991
over whether C&S/Sovran must perform under the Agreement. As a result of its
acquisition of C&S/Sovran on December 31, 1991, NationsBank became a party to
21
<PAGE>
the Litigation as the successor to C&S/Sovran. Therefore, NationsBank is bound
by the First Order and Second Order to perform the Agreement. See "THE
MERGER -- Background of the Merger."
FIRST FEDERAL REASONS FOR THE MERGER
The First Federal Board of Directors approved the Restated Agreement in
1989 and Amendment No. 1 and Amendment No. 2 in 1990, which provided for the
receipt of C&S/Sovran common stock by First Federal stockholders in the Merger.
In doing so, First Federal's Board of Directors considered a number of factors.
The First Federal Board of Directors did not assign any relative or specific
weights to the factors considered. Among the material factors considered by the
First Federal Board of Directors were the value of the C&S/Sovran common stock
to be received in the Merger relative to the then book value of First Federal
Common Stock; that the Merger afforded First Federal's stockholders an enhanced
opportunity to receive cash dividends; and that the Merger also provided First
Federal's stockholders with the opportunity for greater liquidity for their
First Federal Common Stock given the larger capitalization and more established
trading market for the shares to be received by First Federal's stockholders in
the Merger. First Federal's Board of Directors also considered the oral opinion
of Interstate/Johnson Lane presented to the Board of Directors in 1990 that the
terms of the Merger were fair, from a financial point of view, to First
Federal's stockholders.
As a result of the acquisition by NationsBank of C&S/Sovran in 1991, the
Agreement provides for First Federal stockholders to receive shares of
NationsBank Common stock in the Merger. First Federal's Board of Directors
believes that the proposed Merger is in the best interests of First Federal and
its stockholders. In reaching that conclusion, the First Federal Board of
Directors considered various factors, including the following:
(Bullet) ADVICE OF FINANCIAL ADVISOR AND FAIRNESS OPINION. The opinion
of Interstate/Johnson Lane that, as of the date hereof, the
consideration to be received by stockholders of First Federal
upon consummation of the Merger is fair, from a financial
point of view, to the stockholders of First Federal. See "THE
MERGER -- Opinion of First Federal's Financial Advisor."
(Bullet) THE FINANCIAL TERMS OF THE MERGER. The information presented
by Interstate/Johnson Lane to First Federal's Board of
Directors included transaction multiples for selected
comparable mergers and acquisitions. The Board of Directors
determined that the transaction multiples to be received by
First Federal stockholders, based on the Exchange Ratio in
the Merger and the NationsBank Common Stock price on December
31, 1996, compared favorably with such multiples. See "THE
MERGER -- Opinion of First Federal's Financial Advisor."
(Bullet) THE EFFECT ON STOCKHOLDER VALUE OF FIRST FEDERAL REMAINING
INDEPENDENT COMPARED TO THE EFFECT OF ITS COMBINING WITH
NATIONSBANK. In this respect, the Board of Directors
considered several matters. First, the Board of Directors
considered whether it was reasonable to anticipate that First
Federal, as an independent enterprise, could meet the
earnings projections necessary to produce a value comparable
to the value to be received in the Merger. Second, there is
no reliable evidence to suggest that another strategic
alternative would produce better value for the First Federal
stockholders. Third, a decision to remain independent in the
context of the NationsBank proposal would likely have a
material adverse effect on the market price of First Federal
Common Stock.
(Bullet) THE OPPORTUNITY TO PROVIDE FIRST FEDERAL'S STOCKHOLDERS WITH
ENHANCED LIQUIDITY FOR THEIR SHARES. The Board of Directors
also considered that the Merger will enable First Federal
stockholders to exchange their shares of First Federal Common
Stock for shares of common stock of a larger and more
diversified entity, the stock of which is more widely held
and more actively traded.
(Bullet) THE TAX-FREE NATURE OF THE TRANSACTION AND CERTAIN
NON-FINANCIAL INFORMATION. The Board of Directors took into
account that it is expected that the Merger will be a
tax-free transaction (other than with respect to cash paid in
lieu of fractional shares) to First Federal stockholders for
federal income tax purposes. The Board of Directors also took
into consideration that the Merger would trigger certain
change in control provisions of the Change in Control
Agreements previously entered into with several of First
Federal's executives. See "THE MERGER -- Interests of Certain
Persons in the Merger."
(Bullet) REGULATORY APPROVALS. The likelihood of obtaining the
regulatory approvals that would be required with respect to
the Merger. See "THE MERGER -- Bank Regulatory Matters."
The foregoing discussion of the information and factors considered by the
First Federal Board of Directors is not intended to be exhaustive but is
believed to include all material factors considered by the First Federal Board
of Directors.
22
<PAGE>
The First Federal Board of Directors did not assign any relative or specific
weights to the foregoing factors, and individual directors may have given
different weights to different factors.
FOR THE REASONS DESCRIBED ABOVE, THE FIRST FEDERAL BOARD OF DIRECTORS
BELIEVES THE MERGER IS FAIR TO, AND IS IN THE BEST INTERESTS OF, THE FIRST
FEDERAL STOCKHOLDERS. ACCORDINGLY, THE FIRST FEDERAL BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT THE FIRST FEDERAL STOCKHOLDERS VOTE "FOR" APPROVAL
OF THE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY.
OPINION OF FIRST FEDERAL'S FINANCIAL ADVISOR
Interstate/Johnson Lane was retained by First Federal to act as its
financial advisor in connection with the Merger. Interstate/Johnson Lane
delivered to the First Federal Board of Directors its written opinion dated the
date hereof (the "Interstate/Johnson Lane Opinion") to the effect that, as of
the date thereof, based on the matters set forth therein, the consideration to
be received by stockholders of First Federal upon consummation of the Merger is
fair, from a financial point of view, to the stockholders of First Federal.
Interstate/Johnson Lane has consented to the inclusion of the
Interstate/Johnson Lane Opinion in this Proxy Statement-Prospectus.
THE FULL TEXT OF THE INTERSTATE/JOHNSON LANE OPINION, WHICH SETS FORTH THE
ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED AND LIMITS ON THE
REVIEW UNDERTAKEN, IS ATTACHED AS APPENDIX A TO THIS PROXY STATEMENT-PROSPECTUS
AND IS INCORPORATED HEREIN BY REFERENCE. THE DESCRIPTION OF THE
INTERSTATE/JOHNSON LANE OPINION SET FORTH HEREIN IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO APPENDIX A. FIRST FEDERAL'S STOCKHOLDERS ARE URGED TO READ THE
INTERSTATE/JOHNSON LANE OPINION IN ITS ENTIRETY.
Interstate/Johnson Lane is a nationally recognized investment banking firm
and was selected by First Federal based on the firm's reputation and experience
in investment banking in general, based on its recognized expertise in the
valuation of banking businesses and because of its familiarity with, and prior
work for, First Federal. Interstate/Johnson Lane, as part of its investment
banking business, is engaged in the valuation of businesses and their securities
in connection with mergers and acquisitions, negotiated underwritings,
competitive biddings, secondary distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes.
In connection with rendering its opinion dated as of the date hereof,
Interstate/Johnson Lane, among other things, (i) reviewed the Agreement; (ii)
reviewed annual audited financial statements for First Federal and NationsBank,
interim unaudited financial statements through September 30, 1996 for
NationsBank and the interim unaudited financial statements through December 31,
1996 for First Federal; (iii) reviewed publicly available information including
recent OTS and Commission filings and stockholder communications for First
Federal and for NationsBank, respectively; (iv) met with members of the senior
managements of First Federal and NationsBank to discuss their respective
businesses, financial conditions and operating results; (v) considered the pro
forma effects of the Merger and the Boatmen's Acquisition on NationsBank's
financial results and the pro forma equivalent for the Merger and the Boatmen's
Acquisition on First Federal's financial results; (vi) compared certain
financial and stock market data for First Federal and for NationsBank with
similar data for selected publicly held savings banks and banks; (vii) reviewed
the financial terms of certain recent business combinations in the commercial
banking industry; (viii) reviewed historical market price and volume data for
the First Federal Common Stock and the NationsBank Common Stock; (ix) reviewed
various published research reports and investment opinions on NationsBank; and
(x) performed such other financial studies and analyses as it deemed
appropriate.
In rendering the Interstate/Johnson Lane Opinion, Interstate/Johnson Lane
relied without independent verification upon the accuracy and completeness of
all the financial and other information furnished to it by or on behalf of First
Federal and NationsBank, and other published information that it considered in
its review. Interstate/Johnson Lane relied upon the reasonableness of all
projections and forecasts provided to it by First Federal and assumed that they
were prepared in accordance with accepted practice on a basis reflecting the
best currently available good faith judgments and estimates of First Federal's
management and that such forecasts would be realized in the amounts and at the
times contemplated thereby. Interstate/Johnson Lane's opinion is based on the
circumstances existing and known to it as of the date of the Interstate/Johnson
Lane Opinion. Interstate/Johnson Lane is not an expert in the evaluation of loan
and lease portfolios for purposes of assessing the adequacy of the allowances
for losses with respect thereto and has assumed, with First Federal's consent,
that such allowances for each of First Federal and NationsBank are in the
aggregate adequate to cover all such losses. In addition, Interstate/Johnson
Lane has not reviewed individual credit files nor has it made any independent
evaluations or appraisals of
23
<PAGE>
the assets and liabilities (contingent or otherwise) of First Federal and
NationsBank or any of their respective subsidiaries or been furnished with any
such evaluation or appraisal. Interstate/Johnson Lane does not express any
opinion regarding the value of any of First Federal's or NationsBank's specific
individual assets. Interstate/Johnson Lane has also assumed, with First
Federal's consent, that obtaining any necessary regulatory approvals and third
party consents for the Merger or otherwise will not have an adverse effect on
First Federal, NationsBank or the combined company pursuant to the Merger.
The following is a summary of the material financial analyses presented by
Interstate/Johnson Lane to the First Federal Board of Directors in connection
with providing its opinion to the First Federal Board of Directors, and does not
purport to be a complete description of the analyses performed by
Interstate/Johnson Lane.
COMPARABLE COMPANIES ANALYSIS. Based on publicly available information,
First Call and IBES consensus earnings estimates and First Federal's fiscal 1997
budget, Interstate/Johnson Lane reviewed and compared actual and estimated
selected financial, operating and stock market information and financial ratios
of First Federal and NationsBank to groups of six and seven additional banking
organizations, respectively. (First Call and IBES compile earnings estimates
published by selected research analysts for use by the investment community.)
First Federal was compared to a group of six Georgia savings banks consisting of
CCF Holding Company, Eagle Bancshares, Inc., First Georgia Holding, Inc., First
Liberty Financial Corp., FLAG Financial Corporation and Bank of Newnan ("the
Selected Georgia Savings Banks"). NationsBank was compared to a group of seven
national and super-regional banks consisting of BankAmerica Corporation,
Citicorp, First Union Corporation, The Chase Manhattan Corporation, BancOne
Corporation, Norwest Corporation and Wells Fargo & Co. (the "Selected National
Banks"). The historical financial information and ratios analyzed for the
companies are as of their respective most recent reported periods.
Interstate/Johnson Lane's observations included, among other things, the
following: First Federal had a ratio of common stockholders' equity to assets of
10.4% compared with median common stockholders' equity to assets for the
Selected Georgia Savings Banks of 8.9%. First Federal had a return on average
assets and a return on average common stockholders' equity of 0.9% and 8.4%,
respectively, compared with a median return on assets and a median return on
common stockholders' equity for the Selected Georgia Savings Banks of -0.1% and
- -0.4%, respectively. First Federal had an efficiency ratio of 71.0% compared
with a median efficiency ratio for the Selected Georgia Savings Banks of 69.6%.
First Federal had a stock price to book value ratio of 448% compared to a median
stock price to book value ratio for the Selected Georgia Savings Banks of 140%.
The analysis reflected a deposit premium and price to earnings multiples for
1995, 1996 and 1997 for First Federal of 41.4%, 37.8 times, 54.6 times and 34.0
times, respectively, compared to a deposit premium and price to earnings
multiples for 1995, 1996 and 1997 for the Selected Georgia Savings Banks of
4.4%, 13.6 times, 12.3 times and 11.2 times, respectively.
Interstate/Johnson Lane's observations also included, among other things,
the following: NationsBank had a ratio of common stockholders' equity to assets
of 7.1% compared with a median common stockholders' equity to assets for the
Selected National Banks of 7.6%. NationsBank had a return on average assets and
a return on average common stockholders' equity of 1.2% and 17.6%, respectively,
compared with a median return on assets and a median return on common
stockholders' equity for the Selected National Banks of 1.0% and 11.4%,
respectively. NationsBank had an efficiency ratio of 55.5% compared with a
median efficiency ratio for the Selected National Banks of 59.2%. NationsBank
had a stock price to book value ratio of 215% compared to a median stock price
to book value ratio for the Selected National Banks of 226%. The analysis
reflected a deposit premium and price to earnings multiples for 1995, 1996 and
1997 for NationsBank of 13.9%, 13.8 times, 12.1 times and 11.4 times,
respectively, compared to a deposit premium and price to earnings multiples for
1995, 1996 and 1997 for the Selected National Banks of 13.0%, 15.0 times, 13.5
times and 12.1 times, respectively.
COMPARABLE TRANSACTIONS ANALYSIS. Interstate/Johnson Lane reviewed certain
information relating to 32 announced or completed mergers since December 1, 1995
in which a United States savings bank having assets between $100 million and
$500 million was acquired or merged into another entity (the "Selected U.S.
Savings Bank Mergers"). Such analysis indicated that the median values of the
price paid as a percentage of the seller's stock price (calculated 30 days prior
to the public announcement of a possible acquisition of the acquired banking
organization or the acquiror's interest in the transaction) was 123.5% for the
Selected U.S. Savings Bank Mergers compared to a price of approximately 142.9%
to be paid pursuant to the Merger. Such analysis also indicated that the median
values of the price paid to book value, to tangible book value and to the latest
12-month earnings per share for the Selected U.S. Savings Bank Mergers were
143.5%, 144.3% and 17.8 times, respectively, compared with the Merger multiples
of the price paid to book value, to tangible book value and to the latest
12-month earnings per share of 462.2%, 462.2% and 55.4 times, respectively. The
median values of the price paid to assets and the tangible book premium to core
deposits for the Selected U.S. Savings Bank Mergers were 13.2% and 5.4%,
respectively, compared to a price of 48.3% of assets and a tangible book premium
to deposits of 43.2% to be paid pursuant to the Merger.
24
<PAGE>
Interstate/Johnson Lane reviewed certain information relating to five
announced or completed mergers since December 1, 1995 in which a Southeastern
savings bank having assets between $100 million and $500 million was acquired or
merged into another entity (the "Selected Southeastern Savings Bank Mergers").
Such analysis indicated that the median values of the price paid as a percentage
of the seller's stock price (calculated 30 days prior to the public announcement
of a possible acquisition of the acquired banking organization or the acquiror's
interest in the transaction) was 114.8% for the Selected Southeastern Savings
Bank Mergers compared to a price of approximately 142.9% to be paid pursuant to
the Merger. Such analysis also indicated that the median values of the price
paid to book value, to tangible book value and to the latest 12-month earnings
per share for the Selected Southeastern Savings Bank Mergers were 143.5%, 143.5%
and 14.2 times, respectively, compared with the Merger multiples of the price
paid to book value, to tangible book value and to the latest 12-month earnings
per share of 462.2%, 462.2% and 55.4 times, respectively. The median values of
the price paid to assets and the tangible book premium to core deposits for the
Selected Southeastern Savings Bank Mergers were 8.7% and 3.1%, respectively,
compared to a price of 48.3% of assets and a tangible book premium to deposits
of 43.2% to be paid pursuant to the Merger.
Interstate/Johnson Lane reviewed certain information relating to four
announced or completed mergers since December 1, 1995 in which a Georgia bank
having assets between $100 million and $500 million was acquired or merged into
another entity (the "Selected Georgia Bank Mergers"). Such analysis indicated
that the median values of the price paid to book value, to tangible book value
and to the latest 12-month earnings per share for the Selected Georgia Bank
Mergers were 195.5%, 201.8% and 14.0 times, respectively, compared with the
Merger multiples of the price paid to book value, to tangible book value and to
the latest 12-month earnings per share of 462.2%, 462.2% and 55.4 times,
respectively. The median values of the price paid to assets and the tangible
book premium to core deposits for the Selected Georgia Bank Mergers were 15.3%
and 9.4%, respectively, compared to a price of 48.3% of assets and a tangible
book premium to deposits of 43.2% to be paid pursuant to the Merger.
Interstate/Johnson Lane reviewed certain information relating to six
announced or completed mergers since January 1, 1995 in which a Georgia savings
bank, of any asset size, was acquired or merged into another entity (the
"Selected Georgia Savings Bank Mergers"). Such analysis indicated that the
median values of the price paid as a percentage of the seller's stock price
(calculated 30 days prior to the public announcement of a possible acquisition
of the acquired banking organization or the acquiror's interest in the
transaction) was 231.1% for the Selected Georgia Savings Bank Mergers, compared
to a price of approximately 142.9% to be paid pursuant to the Merger. Such
analysis also indicated that the median values of the price paid to book value,
to tangible book value and to the latest 12-month earnings per share for the
Selected Georgia Savings Bank Mergers were 146.1%, 150.7% and 12.4 times,
respectively, compared with the Merger multiples of the price paid to book
value, to tangible book value and to the latest 12-month earnings per share of
462.2%, 462.2% and 55.4 times, respectively. The median values of the price paid
to assets and the tangible book premium to core deposits for the Selected
Georgia Savings Bank Mergers were 13.7% and 7.1%, respectively, compared to a
price of 48.3% of assets and a tangible book premium to deposits of 43.2% to be
paid pursuant to the Merger.
PRO FORMA MERGER ANALYSIS. Interstate/Johnson Lane reviewed certain pro
forma summaries of selected financial data for NationsBank for the fiscal year
ended 1995 and the interim period ended September 30, 1996 and for First Federal
for the fiscal year ended September 30, 1996 and the interim period ended
December 31, 1996, reflecting the Merger as if the Merger had been consummated
as of the beginning of each period presented. Interstate/Johnson Lane examined
the pro forma effects of the Merger on earnings per common share, cash dividends
per common share and shareholders' equity per share.
DIVIDEND DISCOUNT ANALYSIS. Interstate/Johnson Lane performed a dividend
discount analysis to determine a range of present values per share of First
Federal Common Stock assuming First Federal continued as either a stand-alone
entity (the "Stand-Alone Case") or was sold at the end of five years (the "Sale
Case"). Based on First Federal's fiscal 1997 budget and additional information
supplied by management, Interstate/Johnson Lane assumed a steady 2% increase in
earnings per share from 1997 through 2001. Additionally, the dividend stream is
projected to increase $.04 per year from its estimated 1997 level through 2001.
The terminal values differ in the two scenarios. In the Stand-Alone Case,
Interstate/Johnson Lane utilized a range of price-earnings multiples consistent
with the range of price-earnings multiples at which stocks in the group of
Selected Georgia Savings Banks trade (12 to 17 times current earnings per
share). In the Sale Case, Interstate/Johnson Lane assumed that First Federal
would be sold at an earnings multiple consistent with those seen in the Selected
Mergers (12 to 18 times the previous 12-month earnings per share). The dividend
streams and terminal values were presently valued using a range of discount
rates from 5% to 15%.
25
<PAGE>
Applying the above multiples and discount rates, Interstate/Johnson Lane
determined that the value of First Federal Common Stock in the Stand-Alone Case
ranged from approximately $18.04 to $37.19 per share, and in the Sale Case
ranged from approximately $18.04 to $39.12 per share.
OTHER ANALYSES. Interstate/Johnson Lane reviewed various published research
reports on NationsBank and, among other things, the investment opinions, stock
price targets and earnings estimates contained therein. In addition,
Interstate/Johnson Lane reviewed and analyzed the historical trading prices and
volumes for NationsBank Common Stock and for First Federal Common Stock.
The summary set forth above describes the material analyses that
Interstate/Johnson Lane performed, but does not purport to be a complete
description of such analyses. The preparation of a fairness opinion is a complex
process and is not necessarily susceptible to partial analysis or a summary
description.
Interstate/Johnson Lane believes that its analyses must be considered as a
whole and that selecting portions of its analyses without considering all
factors and analyses would create an incomplete view of the analyses and
processes underlying its opinion. In its analyses, Interstate/Johnson Lane
relied upon numerous assumptions made by First Federal and NationsBank with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of First Federal or
NationsBank. Analyses based on forecasts of future results are not necessarily
indicative of actual values, which may be significantly more or less favorable
than suggested by such analyses. No company or transaction used as a comparison
in the analysis is identical to First Federal or NationsBank or to the Merger.
Additionally, estimates of the value of businesses do not purport to be
appraisals or necessarily reflective of the prices at which businesses actually
may be sold. Because such estimates are inherently subject to uncertainty,
Interstate/Johnson Lane does not assume responsibility for the accuracy of such
estimates. Interstate/Johnson Lane's analyses were prepared solely for purposes
of its opinion dated the date hereof rendered to the First Federal Board of
Directors regarding the fairness of the proposed consideration to be received
for shares of First Federal Common Stock pursuant to the Merger to holders of
such shares and do not purport to be appraisals or necessarily reflect the
prices at which First Federal or the First Federal Common Stock actually may be
sold. Furthermore, Interstate/Johnson Lane is not expressing any opinion as to
the range of prices at which the NationsBank Common Stock will trade subsequent
to consummation of the Merger.
For the services of Interstate/Johnson Lane as financial advisor to First
Federal in connection with the Merger, Interstate/Johnson Lane will receive a
fee of $75,000 ($37,500 of which has been previously paid). No portion of
Interstate/Johnson Lane's fee is contingent upon the closing of the Merger. In
addition, First Federal has agreed to reimburse Interstate/Johnson Lane for its
reasonable out-of-pocket expenses incurred in connection with the Merger, but
not to exceed $10,000, and to indemnify Interstate/Johnson Lane against certain
liabilities, including certain liabilities arising under the federal securities
laws. Interstate/Johnson Lane has provided certain investment banking services
to First Federal from time to time, for which it has received customary
compensation. In addition, Interstate/Johnson Lane has provided, and may provide
in the future, certain investment banking services to NationsBank, for which it
has received, and will receive, customary compensation. Most recently,
Interstate/Johnson Lane acted as a co-managing underwriter in a sale of
NationsBank senior notes completed October 26, 1993.
Interstate/Johnson Lane has advised First Federal that, in the ordinary
course of its business as a full-service securities firm, Interstate/Johnson
Lane may, subject to certain restrictions, actively trade the equity or debt
securities of First Federal or of NationsBank for its own account or for the
accounts of its customers and, accordingly, may at any time hold a long or short
position in such securities.
CONDITIONS TO THE MERGER
The obligations of NationsBank and First Federal to consummate the Merger
are subject to the satisfaction (unless otherwise waived by the party so
permitted in accordance with the terms of the Agreement) of each of the
following conditions:
(a) the representations and warranties of each of NationsBank and
First Federal set forth or referred to in the Agreement shall be
true and correct in all material respects as of the date of the
Agreement and as of the Effective Date with the same effect as
though all such representations and warranties had been made on
and as of the Effective Date, except for (i) any such
representations and warranties confined to a specified date, which
shall be true and correct in all material respects as of such
date, (ii) changes in the ordinary course of business consistent
with past practice, or (iii) changes resulting from effecting the
transactions specifically contemplated by the Agreement or the
Plan of Merger, including the fees and expenses incurred in
connection therewith;
26
<PAGE>
(b) each and all of the covenants and agreements of each of
NationsBank and First Federal to be performed and complied with
pursuant to the Agreement and the other agreements contemplated
thereby prior to the Effective Date shall have been duly performed
and complied with in all material respects;
(c) each of NationsBank and First Federal shall have delivered to the
other a certificate, dated as of the Effective Date and signed on
its behalf by its Chairman of the Board or its President, and its
Treasurer, to the effect that (i) the conditions of its
obligations have been satisfied and (ii) that there has been no
material adverse change in the consolidated financial condition or
consolidated results of operations of such party, other than
changes in the consolidated financial condition or consolidated
results of operations of such party resulting from effecting the
transactions specifically contemplated by the Agreement or the
Plan of Merger, all in such reasonable detail as the other party
shall request;
(d) all action necessary to authorize the execution, delivery and
performance of the Agreement and the consummation of the
transactions contemplated thereby shall have been duly and validly
taken by each of NationsBank and First Federal and each shall have
furnished to the other certified copies of resolutions duly
adopted by such party's Board of Directors evidencing the same;
(e) the stockholders of First Federal shall have approved the
Agreement, and the consummation of the transactions contemplated
thereby including the Merger, as and to the extent required by law
and by the provisions of any governing instruments, and First
Federal shall have furnished to NationsBank certified copies of
resolutions duly adopted by First Federal's stockholders
evidencing the same; provided further, the holders of no more than
7% of the issued and outstanding shares of First Federal Common
Stock shall have voted against adoption of the Agreement;
(f) all approvals and authorizations of, filings and registrations
with, and notifications to, all federal and state authorities
required for consummation of the Merger and for the preventing of
any termination of any right, privilege, license or agreement of
either NationsBank or First Federal, or any of their respective
subsidiaries which, if not obtained or made, would have a material
adverse impact on the financial condition or results of operation
of either NationsBank or First Federal (as applicable) and its
subsidiaries on a consolidated basis, shall have been obtained or
made and shall be in full force and effect and all waiting periods
required by law shall have expired; provided further, to the
extent that any lease, license, loan or financing agreement or
other contract or agreement to which First Federal or any of its
subsidiaries, as the case may be, is a party requires the consent
of or waiver from the other party thereto as a result of the
transactions contemplated by the Agreement, such consent or waiver
shall have been obtained, unless (i) waived by the appropriate
party, or (ii) the failure to obtain such consent or waiver would
not have a material adverse impact on the business, operations or
financial condition of First Federal or any of its subsidiaries
following the Merger or the transactions contemplated thereby;
provided further, any approval obtained from any regulatory
authority which is necessary to consummate the transactions
contemplated by the Agreement shall not be conditioned or
restricted in a manner in which in the judgment of the Board of
Directors of either party materially adversely affects the
economic assumptions of the transactions contemplated hereby or
the business of either party so as to render inadvisable the
consummation of the Merger;
(g) no action or proceedings shall have been instituted by any
governmental authority or to the knowledge of either NationsBank
or First Federal threatened by any governmental authority seeking
to restrain the consummation of the transactions contemplated by
the Agreement which, in the opinion of the Board of Directors of
NationsBank or First Federal, renders it impossible or inadvisable
to consummate the transactions provided for in the Agreement;
(h) there shall have been no determination by the Board of Directors
of either NationsBank or First Federal that the Merger or the
other transactions contemplated by the Agreement have become
impractical because any state of war, national emergency, or
banking moratorium shall have been declared in the United States
or a general suspension of trading on the NYSE occurred; provided
further, there shall have been no determination by the Board of
Directors of either NationsBank or First Federal that the
consummation of the Merger or the other transactions contemplated
by the Agreement is not in the best interests of such party or its
stockholders by reason of a material adverse change in the
consolidated financial condition or consolidated results of
operations of the other party, other than changes in the
consolidated financial condition or consolidated results of
operations of such party resulting from effecting the transactions
specifically contemplated by the Agreement;
27
<PAGE>
(i) each director and officer of First Federal shall have delivered to
NationsBank a letter concerning claims such directors and officers
may have against First Federal, in which the directors and
officers shall: (i) acknowledge the assumption by NationsBank of
all liability (to the extent First Federal is so liable) for
claims for indemnification arising under the charter or bylaws of
First Federal as existing on December 31, 1996, or as may be
afforded by Georgia law or the laws of the United States and for
claims for salaries, wages or other compensation, employee
benefits, reimbursement of expenses or worker's compensation
arising out of employment through the Effective Date; (ii) affirm
in their capacities as officers and directors, they do not have
nor are they aware of any claims they might have (other than those
referred to in (i) above) against First Federal; and (iii) release
any and all claims that they may have other than those referred to
in (i) above; provided further, NationsBank shall acknowledge
receipt of the letter and affirm its assumption of the liabilities
described in (i) above;
(j) NationsBank shall have delivered to First Federal an opinion of
Smith Helms Mulliss & Moore, L.L.P, dated as of the Effective
Date, and First Federal shall have delivered to NationsBank an
opinion of Smith, Mackinnon, Greeley, Bowdoin & Edwards, P.A.,
dated as of the Effective Date, each in substantially the form and
to the effect specified in Exhibit 6 to the Agreement;
(k) NationsBank shall have received from Arthur Andersen letters dated
as of (i) the date of this Proxy Statement-Prospectus and (ii) the
Effective Date, with respect to certain financial information
regarding First Federal;
(l) each of NationsBank and First Federal shall have delivered to the
other a certificate, dated as of the Effective Date, signed by its
Chairman of the Board or its President and by its Treasurer to the
effect that, to the best knowledge and belief of such officers,
the statement of facts and representations made on behalf of the
management of such party, presented to King & Spalding, were at
the date of such request or presentation and of any such
supplement, true, correct and complete and are on the date of such
certificate, to the extent contemplated by the request or
presentation and any such supplemental request, true, correct and
complete as though such request or presentation and any such
supplemental request had been made on the date of such
certificate, and each party shall have received a copy of the tax
opinion referred to in the Agreement;
(m) First Federal shall have received a letter from Interstate/Johnson
Lane, dated as of the date of this Proxy Statement-Prospectus, to
the effect that in the opinion of such firm the terms of the
Merger are fair to the stockholders of First Federal from a
financial point of view; and
(n) the Registration Statement shall be effective under the Securities
Act, and no stop orders suspending the effectiveness of the
Registration Statement shall be in effect and no proceedings for
such purpose, or under the proxy rules of the OTS pursuant to the
Exchange Act, and with respect to the transactions contemplated
hereby, shall be pending before or threatened by the Commission or
the OTS.
CONDUCT OF BUSINESS PRIOR TO THE MERGER
In the Agreement, First Federal has agreed that from the date of the
Original Agreement until the earlier of the Effective Date or the
termination of the Agreement, First Federal will not do or agree or commit
to do, any of the following without the prior written consent of the chief
executive officer or chief financial officer of NationsBank, which consent
shall not be unreasonably withheld:
(a) Amend its charter or bylaws;
(b) Impose on any share of stock held by it in any of its
subsidiaries, any material lien, charge, or encumbrance, or permit
any such lien, charge, or encumbrance to exist;
(c) Except as otherwise expressly permitted in the Agreement,
repurchase, redeem, or otherwise acquire or exchange, directly or
indirectly, any shares of its capital stock or any securities
convertible into any shares of its capital stock;
(d) Except as otherwise expressly permitted in the Agreement, make or
effect any change in equity capitalization;
(e) Acquire direct or indirect control over any corporation,
association, firm or organization, other than in connection with
(i) exercise of rights as a secured party or creditor in the
ordinary course of business, or (ii) acquisitions of control by
First Federal in its fiduciary capacity;
28
<PAGE>
(f) Sell or otherwise dispose of, or permit any of its subsidiaries,
as the case may be, to sell or otherwise dispose of: (i) any
shares of capital stock of any subsidiary; (ii) all or
substantially all of the assets of First Federal or any
subsidiary; (iii) any subsidiary; or (iv) assets other than in the
ordinary course of business for reasonable and adequate
consideration;
(g) Incur, or permit any of its subsidiaries to incur, any additional
debt obligation or other obligation for borrowed money in excess
of an aggregate of $100,000 (for First Federal and its
subsidiaries on a consolidated basis) except in the ordinary
course of the business of First Federal and its subsidiaries
consistent with applicable laws and regulations and past practices
(and such ordinary course of business shall include, but shall not
be limited to, creation of deposit liabilities, purchases of
federal funds, liabilities to the Federal Home Loan Banks under
advances therefrom, sales of certificates of deposit, and entry
into repurchase agreements);
(h) Grant any general increase in compensation to its employees as a
class or to its officers, except in accordance with its past
practice or as required by law; pay any bonus except in accordance
with past practice or the provisions of any applicable program or
plan adopted by the Board of Directors of First Federal prior to
the date of the Original Agreement; grant any increase in fees or
other increases in compensation or other benefits to any of its
directors; or effect any change in retirement benefits for any
class of its employees or officers (unless such change is required
by applicable law) that would materially increase the retirement
benefit liabilities of First Federal and its subsidiaries on a
consolidated basis;
(i) Amend any existing employment, management, consulting or other
service, deferred compensation, supplemental retirement benefit,
excess benefit or retainer contract between First Federal or any
subsidiary and any person (unless such amendment is required by
law) to increase the compensation or benefits payable thereunder
or enter into any new employment contract with any person that
First Federal or its applicable subsidiary does not have the
unconditional right to terminate without liability (other than
liability for services already rendered), at any time on or after
the Effective Date or;
(j) Adopt any new employee benefit plan of First Federal or any
subsidiary or make any material change in or to any existing
employee benefit plan of First Federal or any subsidiary other
than (i) as disclosed in the Agreement, or (ii) any such change
that is required by law or that, in the opinion of counsel, is
necessary or advisable to maintain the tax qualified status of any
such plan.
In addition, First Federal has agreed that unless the prior written consent
of NationsBank shall have been obtained and except as otherwise contemplated by
the Agreement, First Federal will and will cause its subsidiaries (a) to operate
their respective businesses only in the usual, regular and ordinary course
including the payment or accrual of as much of its costs and expenses in
carrying out the transactions contemplated by the Agreement as practicable
consistent with generally accepted accounting principles prior to the Effective
Date; (b) to preserve intact their respective business organizations and assets
and maintain their respective rights and franchises; and (c) to take no action
which would (i) adversely affect the ability of any of them to obtain any
necessary approvals of governmental authorities required for the transactions
contemplated hereby without imposition of a condition or restriction of the type
referred to in the Agreement, or (ii) adversely affect the ability of First
Federal to perform its covenants and agreements under the Agreement.
MODIFICATION, WAIVER AND TERMINATION; EXPENSES
The Agreement provides that to the extent permitted by law, it may be
amended by a subsequent writing signed by NationsBank and First Federal upon the
approval of each of their respective Boards of Directors. However, the
provisions of the Agreement relating to the manner or basis in which shares of
First Federal Common Stock will be exchanged for NationsBank Common Stock shall
not be amended after the Special Meeting without the requisite approval of the
holders of the outstanding shares of First Federal Common Stock, and no
amendment to the Agreement shall modify the requirements relating to the
requisite regulatory approval and other action necessary to authorize the
execution, delivery and performance of the Agreement and the consummation of the
transactions contemplated thereby. See "THE MERGER -- Conditions to the Merger"
and " -- Bank Regulatory Matters." The Agreement provides that each party may
waive any default in the performance of any term of the Agreement, waive or
extend the time for the compliance or fulfillment of any obligations under the
Agreement and waive any of the conditions precedent to the Agreement, except any
condition which, if not satisfied, would result in the violation of any law or
applicable governmental regulation.
The Agreement may be terminated by majority vote of the Board of Directors
of both First Federal and NationsBank. The Agreement may also be terminated by
the majority vote of the Board of Directors of either First Federal or
NationsBank
29
<PAGE>
(i) in the event of a material breach of the Agreement by the other party of any
representation, warranty, covenant or agreement which cannot or has not been
cured within 30 days after written notice of such breach; (ii) if (a) the
approval of any governmental or other regulatory authority shall have been
denied by final non-appealable action or if any such action by such authority is
not appealed within the time limit for appeal or (b) the required approval of
the First Federal stockholders is not obtained; or (iii) in the event of the
acquisition of 40% or more of the outstanding shares of common stock of the
other party or the Board of Directors of the other party accepts or publicly
recommends acceptance of an offer from a third party to acquire 50% or more of
its common stock or consolidated assets.
In the Agreement, each of the parties has agreed to bear and pay all costs
and expenses incurred by it or on its behalf in connection with the transactions
contemplated by the Agreement, except for instances in which the Agreement is
terminated by First Federal for the reasons set forth in clauses (i) or (ii) (a)
of the preceding paragraph or by NationsBank for the reasons set forth in clause
(ii) (a) of the preceding paragraph, in which instances NationsBank shall
reimburse First Federal for any and all of the reasonable expenses incurred by
First Federal in attempting to effect the transactions contemplated by the
Agreement. Furthermore, if the Agreement is terminated by the willful breach of
a party, such party shall pay all reasonable expenses of the non-breaching party
incurred by such non-breaching party in attempting to effect the transactions
contemplated by the Agreement. Furthermore, the parties have agreed to each pay
one-half of the printing cost of this Proxy Statement-Prospectus and related
materials.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material United States federal income
tax consequences of the Merger. This discussion is based on provisions of the
Code, the Treasury Regulations thereunder, and rulings and court decisions as of
the date hereof, all of which are subject to change, possibly retroactively. The
discussion is included for general information purposes only.
King & Spalding, special tax counsel to First Federal, has delivered to
First Federal and NationsBank an opinion (the "Tax Opinion") that, based upon
its review of the Registration Statement of which this Proxy
Statement-Prospectus forms a part, the Agreement, certain other facts and
documents which it has considered relevant, and certain representations made to
it by First Federal and NationsBank, the Merger will have the United States
federal income tax consequences set forth below:
(i) the Merger will constitute a "reorganization" within the meaning
of Sections 368(a)(1)(A) and (a)(2)(E) of the Code;
(ii) no gain or loss will be recognized by First Federal stockholders
upon the exchange in the Merger of their First Federal Common
Stock for NationsBank Common Stock (including any fractional
share of NationsBank Common Stock deemed to have been received);
(iii) the tax basis of the NationsBank Common Stock received in the
Merger by a First Federal stockholder (including any fractional
share of NationsBank Common Stock deemed to have been received)
will be the same as the tax basis of the First Federal Common
Stock exchanged for such NationsBank Common Stock;
(iv) the holding period of the NationsBank Common Stock received in
the Merger by a First Federal stockholder (including any
fractional share of NationsBank Common Stock deemed to have been
received) will include the holding period of such stockholder in
the First Federal Common Stock exchanged for such NationsBank
Common Stock, provided that the First Federal Common Stock is
held as a capital asset on the Effective Date; and
(v) a First Federal stockholder who receives cash in the Merger in lieu
of a fractional share interest in NationsBank Common Stock will
recognize a taxable gain or loss, measured by the difference
between the amount of cash received and the portion of the basis of
the share of First Federal Common Stock allocable to such
fractional share interest. Such gain or loss will be capital gain
or loss, provided that such share of First Federal Common Stock is
held as a capital asset on the Effective Date, and will be
long-term capital gain or loss if such share of Common Stock will
have been held by the First Federal stockholder for more than one
year.
In rendering the Tax Opinion, King & Spalding relied upon certain written
representations as to factual matters made by appropriate officers of First
Federal and NationsBank. Such representations are customary for opinions of this
type; the Tax Opinion cannot be relied upon, however, if any such representation
is, or later becomes, inaccurate. No ruling from the
30
<PAGE>
Internal Revenue Service (the "Service") with respect to the tax consequences of
the Merger has been, or will be, requested, and the Tax Opinion is not binding
upon the Service or the courts.
THE FOREGOING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER AND DOES NOT PURPORT TO BE
A COMPLETE ANALYSIS OF ALL POTENTIAL TAX CONSEQUENCES OF THE MERGER. THE
DISCUSSION DOES NOT ADDRESS THE EFFECT OF STATE, LOCAL, FOREIGN OR OTHER TAX
LAWS. IN ADDITION, THE DISCUSSION DOES NOT APPLY TO SPECIAL SITUATIONS, SUCH AS
FIRST FEDERAL STOCKHOLDERS, IF ANY, WHO DO NOT HOLD THEIR FIRST FEDERAL COMMON
STOCK AS A CAPITAL ASSET, WHO RECEIVED THEIR FIRST FEDERAL COMMON STOCK UPON THE
EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION, AND FIRST
FEDERAL STOCKHOLDERS THAT ARE INSURANCE COMPANIES, SECURITIES DEALERS, FINANCIAL
INSTITUTIONS, OR FOREIGN PERSONS. EACH HOLDER OF FIRST FEDERAL COMMON STOCK IS
URGED TO CONSULT A TAX ADVISOR TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO
SUCH STOCKHOLDER OF THE MERGER, INCLUDING THE APPLICATION AND EFFECT OF FEDERAL,
STATE, LOCAL, AND FOREIGN TAX LAWS.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
GENERAL. Certain members of First Federal management have interests in the
Merger that are in addition to any interests they may have as stockholders of
First Federal generally. These interests include, among other provisions,
certain severance and other employee benefits, as described below. In the
ordinary course of business and from time to time, NationsBank may do business
with First Federal, NationsBank may enter into banking transactions with certain
of First Federal's directors, executive officers, and their affiliates, First
Federal may do business with NationsBank, and First Federal may enter into
banking transactions with certain of NationsBank's directors, executive officers
and their affiliates.
CHANGE IN CONTROL AGREEMENTS. Beginning in 1992, First Federal entered into
Change in Control Agreements with each of Messrs. Slade, Gash, Rogers, and Sams
(collectively, the "Officers"). The Change in Control Agreements, which have
since been modified and extended through December 31, 1998, provide that in the
event the Officer's employment is terminated by First Federal except for "cause"
(as defined in the agreements) or by the Officer for "good reason" (as defined
in the agreements) within three years following a Change in Control of First
Federal, or if the Officer resigns for any reason within one year following a
Change in Control of First Federal, the Officer is entitled to receive a lump
sum cash amount equal to three times (two times for Mr. Sams) the aggregate of
the Officer's base salary plus the average of the incentive compensation
payments received by him during the three preceding fiscal years. The Change in
Control Agreements also require First Federal to provide the Officer with
coverage under First Federal's group life insurance plan at no cost to the
Officer for three years (two years for Mr. Sams) following the termination at a
level equal to three times (two times for Mr. Sams) the aggregate of the
Officer's base salary and the average incentive compensation payments received
by him during the three preceding fiscal years. The Change in Control Agreements
also require First Federal to provide for a period of three years (two years for
Mr. Sams) following the date of termination continued coverage to the Officer
under First Federal's dental and medical related insurance plans or equivalent
benefits and, for each officer other than Mr. Sams, an automobile as then
provided by First Federal, at no cost to the Officer. The Change in Control
Agreements also provide that, generally, First Federal's obligations are
suspended (or, in certain circumstances terminated) if the Officer is suspended
or temporarily prohibited from participating in First Federal's affairs by
notice from a bank regulatory agency, if the Officer is removed by a regulatory
agency, or if First Federal is in default of certain obligations under the
Federal Deposit Insurance Act.
Under the Change in Control Agreements, a Change in Control is deemed to
have occurred if (a) any person or group acquires 30% or more of First Federal's
voting stock; (b) a majority of First Federal's Board of Directors ceases to be
comprised of individuals who are presently serving as directors of First
Federal; or (c) any spin-off, split-off, split-up or similar corporate division
occurs that results in the distribution to First Federal stockholders of a
business whose assets represent 20% or more of the fair market value of the
total assets of First Federal immediately before the division. The Merger
constitutes a Change in Control. The Change in Control Agreements provide that
the employment of the Officer will be deemed terminated by him for "good reason"
if the Officer's base salary, position, level of responsibilities or authority
are reduced, the Officer's employment is terminated without "cause," the
Officer's job location is changed, or the Change in Control Agreement is not
renewed or is terminated as a result of the Board's annual review of the Change
in Control Agreement, all without the Officer's written consent. Termination by
First Federal for "cause" consists of any termination because of the Officer's
personal dishonesty, incompetence, wilful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, wilful
violation of any law, rule or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order, or material breach of any
provision of the Change in Control Agreement.
31
<PAGE>
The Change in Control Agreements also provide that the payments required to
be made by First Federal would be reduced to an amount which maximizes the
aggregate payments to be made without causing any payment to be nondeductible by
First Federal as a result of certain provisions of the Code. The Change in
Control Agreements are subject to review and approval by First Federal's Board
of Directors on each anniversary of the effective date of the Change in Control
Agreements in January of each year.
If, pursuant to the provisions described above, payments were required to
be made to the Officers, and assuming the Effective Date occurs prior to
December 31, 1997, the estimated amounts of such payments would be $497,430,
$307,583, $298,943 and $156,415, for Messrs. Slade, Gash, Rogers and Sams,
respectively, or an aggregate of $1,260,371. Computation of the foregoing
benefit amounts assumes that the Officers will terminate their employment on the
date on which the Effective Date occurs.
As previously described, the Second Order held that the number of shares of
NationsBank Common Stock to be offered to the First Federal stockholders will be
reduced by the amounts First Federal may choose to pay to Messrs. Slade, Gash,
Rogers and Sams under the Change in Control Agreements. The amounts set forth in
the preceding paragraph were used by the First Federal Board of Directors to
determine the amount of that reduction, as described by First Federal in the
Share Calculation Letter. See "THE MERGER -- Background of the Merger; Share
Calculation Letter."
ABSENCE OF DISSENTERS' RIGHTS
Pursuant to OTS regulations, holders of First Federal Common Stock will not
have dissenters' rights of appraisal with respect to the Merger if First Federal
Common Stock is quoted on The Nasdaq Stock Market on the date of the Special
Meeting and NationsBank Common Stock is quoted on the NYSE on the Effective
Date. First Federal Common Stock currently is quoted on The Nasdaq Stock Market,
and it is anticipated that First Federal Common Stock will continue to be so
quoted on the date of the Special Meeting. Similarly, NationsBank Common Stock
currently is quoted on the NYSE, and it is anticipated that NationsBank Common
Stock will continue to be so quoted on the Effective Date.
ACCOUNTING TREATMENT
Upon consummation of the Merger, the transaction will be accounted for as a
purchase, and all of the assets and liabilities of First Federal will be
recorded in NationsBank's consolidated financial statements at their estimated
fair value. The amount, if any, by which the purchase price paid by NationsBank
exceeds the fair value of the net assets acquired by NationsBank through the
Merger will be recorded as goodwill. NationsBank's consolidated financial
statements will include the operations of First Federal after the Effective
Date.
BANK REGULATORY MATTERS
FEDERAL RESERVE BOARD. The Merger is subject to prior approval by the
Federal Reserve Board under the BHCA. The BHCA requires the Federal Reserve
Board, when approving a transaction such as the Merger, to take into
consideration whether the operation of First Federal by NationsBank can
reasonably be expected to produce benefits to the public, such as greater
convenience, increased competition or gains in efficiency, that outweigh
possible adverse effects, such as undue concentration of resources, decreased or
unfair competition, conflicts of interests or unsound banking practices. In
addition, the Federal Reserve Board must consider the financial and managerial
resources (including the competence, experience and integrity of the officers,
directors and principal shareholders) and future prospects of the existing and
proposed institutions and the convenience and needs of the communities to be
served. In considering financial resources and future prospects, the Federal
Reserve Board will, among other things, evaluate the adequacy of the capital
levels of the parties to a proposed transaction.
OFFICE OF THRIFT SUPERVISION. The Merger is subject to the approval of the
OTS pursuant to the Bank Merger Act. As a Federal stock savings bank, First
Federal is subject to extensive regulation by the OTS. Lending activities and
other investments of First Federal must comply with various Federal regulatory
requirements. The OTS periodically examines First Federal for compliance with
various regulatory requirements, and First Federal must file reports with the
OTS describing its activities and financial condition. First Federal is also
subject to certain reserve requirements promulgated by the Federal Reserve
Board. This supervision and regulation is intended primarily for the protection
of depositors.
Under the Bank Merger Act, the OTS may not approve the Merger if (a) it
would result in a monopoly, or would be in furtherance of any combination or
conspiracy to monopolize or to attempt to monopolize the business of banking in
any part of the United States, or (b) the effect of the Merger in any section of
the country may be substantially to lessen competition,
32
<PAGE>
or to tend to create a monopoly, or which in any other manner would be in
restraint of trade, unless it finds that the anticompetitive effects of the
proposed transaction are clearly outweighed in the public interest by the
probable effect of the transaction in meeting the convenience and needs of the
community to be served. The OTS is also required to take into consideration the
financial and managerial resources and future prospects of the existing and
proposed institutions and the convenience and needs of the community to be
served.
Regulations of the OTS also require consideration of the fairness of the
proposed transaction and the adequacy of disclosure, including but not limited
to consideration of the fairness of the transaction to all parties (including
the accountholders, borrowers, creditors, and stockholders), the accuracy and
completeness of any disclosure made, and the reasonableness of compensation to
directors and officers of the institutions. In addition, under the Community
Reinvestment Act of 1977, as amended (the "CRA"), the OTS is required to take
into account the record of performance of the existing institutions in meeting
the credit needs of the entire community, including low- to moderate-income
neighborhoods, served by the institutions.
Applicable Federal law provides for the publication of notice and public
comment on applications filed with the Federal Reserve Board and the OTS and
authorizes such agencies to permit interested parties to intervene in the
proceedings. If an interested party is permitted to intervene, such intervention
could delay the regulatory approvals required for consummation of the Merger.
The Merger generally may not be consummated until 15 days following the
date of applicable Federal regulatory approval, during which time the United
States Department of Justice may challenge the Merger on antitrust grounds. The
commencement of an antitrust action would stay the effectiveness of the
regulatory agency's approval unless a court specifically ordered otherwise.
NationsBank and First Federal believe that the Merger does not raise substantial
antitrust or other significant regulatory concerns and that any divestitures
that may be required in order to consummate the Merger will not be material to
the financial condition or results of operations of NationsBank or First Federal
prior to the Effective Date, or NationsBank after the Effective Date.
STATE AUTHORITIES. The Merger is subject to the approval of the State
Authority.
STATUS OF REGULATORY APPROVALS AND OTHER INFORMATION. The Federal Reserve
Board and the OTS have approved the Merger. NationsBank and First Federal have
filed all applications and notices and have taken (or will take) other
appropriate action with respect to the approval of the State Authority. The
Agreement provides that the obligation of each of NationsBank and First Federal
to consummate the Merger is conditioned upon the receipt of all requisite
regulatory approvals, including the approval of the State Authority. THERE CAN
BE NO ASSURANCE THAT THE STATE AUTHORITY WILL APPROVE THE MERGER, AND, IF
APPROVAL IS RECEIVED, THERE CAN BE NO ASSURANCE AS TO THE DATE OF SUCH APPROVAL,
THAT SUCH APPROVAL WILL NOT BE CONDITIONED UPON MATTERS THAT WOULD CAUSE THE
PARTIES TO ABANDON THE MERGER OR THAT NO ACTION WILL BE BROUGHT CHALLENGING SUCH
APPROVAL OR, IF SUCH A CHALLENGE IS MADE, THE RESULT THEREOF.
NationsBank and First Federal are not aware of any governmental approvals
or actions that may be required for consummation of the Merger other than as
described above. Should any other approval or action be required, NationsBank
and First Federal currently contemplate that such approval or action would be
sought.
See "THE MERGER -- Effective Date of the Merger," " -- Conditions to the
Merger" and " -- Modification, Waiver and Termination; Expenses."
RESTRICTIONS ON RESALES BY AFFILIATES
The shares of NationsBank Common Stock to be issued to stockholders of
First Federal in the Merger have been registered under the Securities Act. Such
shares may be traded freely and without restriction by those stockholders not
deemed to be "affiliates" of First Federal as that term is defined under the
Securities Act. Any subsequent transfer of such shares, however, by any person
who is an affiliate of First Federal at the time the Merger is submitted for
vote or consent of the stockholders of First Federal will, under existing law,
require either (a) the further registration under the Securities Act of the
shares of NationsBank Common Stock to be transferred, (b) compliance with Rule
145 promulgated under the Securities Act (permitting limited sales under certain
circumstances) or (c) the availability of another exemption from registration.
An "affiliate" of First Federal, as defined by the rules promulgated pursuant to
the Securities Act, is a person who directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with
First Federal. The foregoing restrictions are expected to apply to the
directors, executive officers and the holders of 10% or more of the First
Federal Common Stock (and to certain relatives or the spouse of any such person
and any trusts, estates, corporations, or other entities in which any such
person has a 10% or greater beneficial or equity interest). Stop transfer
instructions will be
33
<PAGE>
given by NationsBank to the transfer agent with respect to the NationsBank
Common Stock to be received by persons subject to the restrictions described
above, and the certificates for such stock will be appropriately legended.
In addition, the Agreement provides that First Federal will use its best
efforts to cause each person who is identified by it as an affiliate to deliver
to NationsBank a written agreement providing that such person will not sell,
pledge, transfer or otherwise dispose of the shares of First Federal Common
Stock held by such person except as contemplated by such agreement and will not
sell, pledge, transfer or otherwise dispose of the shares of NationsBank Common
Stock to be received by such person upon consummation of the Merger except in
compliance with applicable provisions of the Securities Act and the rules and
regulations thereunder and until such time as the financial results covering at
least 30 days of combined operations of First Federal and NationsBank have been
published within the meaning of Section 201.01 of the Security and Exchange
Commission's Codification of Financial Reporting Policies. NationsBank shall not
be required to maintain the effectiveness of the Registration Statement under
the Securities Act for the purposes of resale of NationsBank Common Stock by
such affiliates.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
NationsBank has a dividend reinvestment and stock purchase plan that
provides, for those shareholders who elect to participate, that dividends on
NationsBank Common Stock will be used to purchase either original issue shares
or shares in the open market at market value of NationsBank Common Stock on a
quarterly basis. The plan also permits participants to invest in additional
shares of NationsBank Common Stock through optional cash payments, within
certain dollar limitations, at the then-current market price of such stock at
the time of purchase on any of 12 monthly investment dates each year. It is
anticipated that NationsBank will continue its dividend reinvestment and stock
purchase plan and that stockholders of First Federal who receive shares of
NationsBank Common Stock in the Merger will have the right to participate
therein, although NationsBank may terminate the plan, in its sole discretion, at
any time.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
NATIONSBANK
NationsBank Common Stock is listed on the NYSE and the PSE under the
trading symbol "NB." NationsBank Common Stock is also listed on the LSE and
certain shares are listed on the Tokyo Stock Exchange. As of December 31, 1996,
NationsBank Common Stock was held of record by approximately 106,345 persons.
The following table sets forth the high and low sales prices of the NationsBank
Common Stock as reported on the NYSE Composite Transactions List and the
dividends declared per share of NationsBank Common Stock for the periods
indicated. The ability of NationsBank to pay dividends to its shareholders is
subject to certain restrictions. See "INFORMATION ABOUT
NATIONSBANK -- Supervision and Regulation."
<TABLE>
<CAPTION>
SALES PRICES
HIGH LOW DIVIDENDS
<S> <C> <C> <C>
Year Ended December 31, 1995:
First Quarter........................................................ $ 25 7/8 $ 22 5/16 $.25
Second Quarter....................................................... 28 7/8 24 5/16 .25
Third Quarter........................................................ 34 7/16 26 7/8 .25
Fourth Quarter....................................................... 37 3/8 32 .29
Year Ended December 31, 1996:
First Quarter........................................................ $ 40 11/16 $ 32 3/16 $.29
Second Quarter....................................................... 42 5/16 37 3/8 .29
Third Quarter........................................................ 47 1/16 38 3/16 .29
Fourth Quarter....................................................... 52 1/8 43 3/16 .33
Year Ending December 31, 1997:
First Quarter (through March , 1997)............................... $ $ $
</TABLE>
34
<PAGE>
FIRST FEDERAL
First Federal Common Stock is included for quotation in The Nasdaq Stock
Market under the symbol "FFBG." The following table sets forth the high and low
sales prices for First Federal Common Stock as reported by The Nasdaq Stock
Market and the dividends declared per share of First Federal Common Stock for
the indicated periods. As of the Record Date, First Federal Common Stock was
held of record by approximately 531 persons. The ability of First Federal to pay
dividends to its shareholders is subject to certain restrictions. See
"INFORMATION ABOUT FIRST FEDERAL -- Supervision and Regulation."
<TABLE>
<CAPTION>
SALES PRICES
HIGH LOW DIVIDENDS
<S> <C> <C> <C>
Year Ended September 30, 1995:
First Quarter.......................................................... $ 32 $ 28 1/8 $.35
Second Quarter......................................................... 33 1/2 27 7/8 .18
Third Quarter.......................................................... 33 28 .18
Fourth Quarter......................................................... 34 1/2 28 3/4 .18
Year Ended September 30, 1996:
First Quarter.......................................................... $ 47 $ 30 $.36
Second Quarter......................................................... 52 42 .19
Third Quarter.......................................................... 60 50 .19
Fourth Quarter......................................................... 82 54 .19
Year Ending September 30, 1997:
First Quarter.......................................................... $ 79 1/2 $ 65 $.19
Second Quarter (through March , 1997)................................
</TABLE>
INFORMATION ABOUT NATIONSBANK
GENERAL
NationsBank is a bank holding company established as a North Carolina
corporation in 1968 and is registered under the BHCA, with its principal assets
being the stock of its subsidiaries. Through its banking subsidiaries (the
"Banks") and its various non-banking subsidiaries, NationsBank provides banking
and banking-related services, primarily throughout the Southeast and
Mid-Atlantic states and Texas. The principal executive offices of NationsBank
are located at NationsBank Corporate Center in Charlotte, North Carolina 28255.
Its telephone number is (704) 386-5000.
NationsBank provides a diversified range of banking and certain nonbanking
financial services and products through its various subsidiaries. NationsBank
manages its activities through three major business units: the General Bank,
Global Finance and Financial Services.
The General Bank provides comprehensive services in the commercial and
retail banking fields, including the origination and servicing of home mortgage
loans, the issuance and servicing of credit cards (through a Delaware
subsidiary), indirect lending, dealer finance and certain insurance services.
The General Bank also provides retirement services for defined benefit and
defined contribution plans, full service and discount brokerage services and
investment advisory services to a proprietary mutual fund, as well as investment
management, private banking and fiduciary services through subsidiaries of
NationsBank. As of December 31, 1996, the General Bank operated 1,979 banking
offices through the following Banks: NationsBank, N.A. (serving the states of
North Carolina, South Carolina, Maryland and Virginia and the District of
Columbia); NationsBank, N.A. (South) (serving the states of Florida and
Georgia); NationsBank of Kentucky, N.A.; NationsBank of Tennessee, N.A.;
NationsBank of Texas, N.A.; and Sun World, N.A. (serving the state of Texas).
The General Bank also provides fully automated, 24-hour cash dispensing and
depositing services throughout the states in which it is located, through 3,948
automated teller machines.
Global Finance provides comprehensive corporate and investment banking as
well as trading and distribution services to domestic and international
customers. The group serves as a principal lender and investor, as well as an
advisor, arranger and underwriter, and manages treasury and trade transactions
for clients and customers. Loan origination and syndication, asset-back lending,
leasing, factoring, project finance and mergers and acquisitions are
representative of the services provided by the group. Global Finance also
underwrites, trades and distributes a wide range of securities (including
bank-eligible securities and, to a limited extent, bank-ineligible securities as
authorized by the Federal Reserve Board), and trades and distributes a wide
range of derivative products in certain interest rate, foreign exchange,
commodity and equity markets. Global Finance
35
<PAGE>
provides its services through various offices located in major United States
cities as well as in London, Frankfurt, Singapore, Bogota, Mexico City, Grand
Cayman, Nassau, Seoul, Tokyo, Osaka, Taipei and Hong Kong.
Financial Services includes NationsCredit Consumer Corporation, primarily a
consumer finance subsidiary, and NationsCredit Commercial Corporation, primarily
a commercial finance subsidiary. NationsCredit Consumer Corporation, which as of
December 31, 1996 had approximately 356 offices located in 35 states, provides
personal, mortgage and automobile loans to consumers and retail finance programs
to dealers. NationsCredit Commercial Corporation consists of seven divisions
that specialize in one or more of the following areas: equipment loans and
leasing; loans for debt restructuring, mergers and acquisitions and working
capital; real estate, golf/recreational and health care financing; and inventory
financing to manufacturers, distributors and dealers.
As part of its operations, NationsBank regularly evaluates the potential
acquisition of, and holds discussions with, various financial institutions and
other businesses of a type eligible for bank holding company investment. In
addition, NationsBank regularly analyzes the values of, and submits bids for,
the acquisition of customer-based funds and other liabilities and assets of such
financial institutions and other businesses. As a general rule, NationsBank
publicly announces such material acquisitions when a definitive agreement has
been reached.
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to the executive compensation, various benefit
plans (including stock option plans), voting securities and the principal
holders thereof, certain relationships and related transactions and other
related matters as to NationsBank is incorporated by reference or set forth in
the NationsBank Annual Report on Form 10-K for the year ended December 31, 1995,
incorporated herein by reference. Stockholders of First Federal desiring copies
of such documents may contact NationsBank at its address or telephone number
indicated under "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
SUPERVISION AND REGULATION
GENERAL. As a registered bank holding company, NationsBank is subject to
the supervision of, and to regular inspection by, the Federal Reserve Board. The
Banks are organized as national banking associations, which are subject to
regulation, supervision and examination by the Office of the Comptroller of the
Currency (the "Comptroller"). The Banks are also subject to regulation by the
FDIC and other federal regulatory agencies. In addition to banking laws,
regulations and regulatory agencies, NationsBank and its subsidiaries and
affiliates are subject to various other laws and regulations and supervision and
examination by other regulatory agencies, all of which directly or indirectly
affect the Corporation's operations, management and ability to make
distributions. The following discussion summarizes certain aspects of those laws
and regulations that affect NationsBank.
Under the BHCA, the activities of NationsBank, and those of companies which
it controls or in which it holds more than 5% of the voting stock, are limited
to banking or managing or controlling banks or furnishing services to or
performing services for its subsidiaries, or any other activity which the
Federal Reserve Board determines to be so closely related to banking or managing
or controlling banks as to be a proper incident thereto. In making such
determinations, the Federal Reserve Board is required to consider whether the
performance of such activities by a bank holding company or its subsidiaries can
reasonably be expected to produce benefits to the public such as greater
convenience, increased competition or gains in efficiency that outweigh possible
adverse effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interest or unsound banking practices. Generally, bank
holding companies, such as NationsBank, are required to obtain prior approval of
the Federal Reserve Board to engage in any new activity not previously approved
by the Federal Reserve Board or to acquire more than 5% of any class of voting
stock of any company.
The BHCA also requires bank holding companies to obtain the prior approval
of the Federal Reserve Board before acquiring more than 5% of any class of
voting stock of any bank which is not already majority-owned by the bank holding
company. Pursuant to the Riegle-Neal Interstate Banking and Branching Efficiency
Act of 1994 (the "Interstate Banking and Branching Act"), a bank holding company
became able to acquire banks in states other than its home state beginning
September 29, 1995, without regard to the permissibility of such acquisition
under state law, but subject to any state requirement that the bank has been
organized and operating for a minimum period of time, not to exceed five years,
and the requirement that the bank holding company, prior to or following the
proposed acquisition, controls no more than 10% of the total amount of deposits
of insured depository institutions in the United States and no more than 30% of
such deposits in that state (or such lesser or greater amount set by state law).
36
<PAGE>
The Interstate Banking and Branching Act also authorizes banks to merge
across state lines, therefore creating interstate branches, beginning June 1,
1997. Under such legislation, each state has the opportunity to "opt out" of
this provision, thereby prohibiting interstate branching in such states, or to
"opt in" at an earlier time, thereby allowing interstate branching within that
state prior to June 1, 1997. Furthermore, pursuant to such act, a bank is now
able to open new branches in a state in which it does not already have banking
operations if the laws of such state permit such DE NOVO branching. Of those
states in which the Banks are located, Delaware, Maryland, North Carolina and
Virginia have enacted legislation to "opt in," thereby permitting interstate
branching prior to June 1, 1997, and Texas has adopted legislation to "opt out"
of the interstate branching provisions (which Texas law currently expires on
September 2, 1999).
As previously described, NationsBank regularly evaluates merger and
acquisition opportunities, and it anticipates that it will continue to evaluate
such opportunities in light of the new legislation.
Proposals to change the laws and regulations governing the banking industry
are frequently introduced in Congress, in the state legislatures and before the
various bank regulatory agencies.
CAPITAL AND OPERATIONAL REQUIREMENTS. The Federal Reserve Board, the
Comptroller and the FDIC have issued substantially similar risk-based and
leverage capital guidelines applicable to United States banking organizations.
In addition, those regulatory agencies may from time to time require that a
banking organization maintain capital above the minimum levels, whether because
of its financial condition or actual or anticipated growth.
The Federal Reserve Board risk-based guidelines define a two-tier capital
framework. Tier 1 capital consists of common and qualifying preferred
shareholders' equity, less certain intangibles and other adjustments. Tier 2
capital consists of subordinated and other qualifying debt, and the allowance
for credit losses up to 1.25% of risk-weighted assets. The sum of Tier 1 and
Tier 2 capital less investments in unconsolidated subsidiaries represents
qualifying total capital, at least 50% of which must consist of Tier 1 capital.
Risk-based capital ratios are calculated by dividing Tier 1 and total capital by
risk-weighted assets. Assets and off-balance sheet exposures are assigned to one
of four categories of risk-weights, based primarily on relative credit risk. The
minimum Tier 1 capital ratio is 4% and the minimum total capital ratio is 8%.
NationsBank's Tier 1 and total risk-based capital ratios under these guidelines
at December 31, 1996 were 7.76% and 12.66%, respectively.
The leverage ratio is determined by dividing Tier 1 capital by adjusted
total assets. Although the stated minimum ratio is 3%, most banking
organizations are required to maintain ratios of at least 100 to 200 basis
points above 3%. NationsBank's leverage ratio at December 31, 1996 was 7.09%.
Management believes that NationsBank meets its leverage ratio requirement.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), among other things, identifies five capital categories for insured
depository institutions (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized) and requires the respective Federal regulatory agencies to
implement systems for "prompt corrective action" for insured depository
institutions that do not meet minimum capital requirements within such
categories. FDICIA imposes progressively more restrictive constraints on
operations, management and capital distributions, depending on the category in
which an institution is classified. Failure to meet the capital guidelines could
also subject a banking institution to capital raising requirements. An
"undercapitalized" bank must develop a capital restoration plan and its parent
holding company must guarantee that bank's compliance with the plan. The
liability of the parent holding company under any such guarantee is limited to
the lesser of 5% of the bank's assets at the time it became "undercapitalized"
or the amount needed to comply with the plan. Furthermore, in the event of the
bankruptcy of the parent holding company, such guarantee would take priority
over the parent's general unsecured creditors. In addition, FDICIA requires the
various regulatory agencies to prescribe certain non-capital standards for
safety and soundness relating generally to operations and management, asset
quality and executive compensation and permits regulatory action against a
financial institution that does not meet such standards.
The various regulatory agencies have adopted substantially similar
regulations that define the five capital categories identified by FDICIA, using
the total risk-based capital, Tier 1 risk-based capital and leverage capital
ratios as the relevant capital measures. Such regulations establish various
degrees of corrective action to be taken when an institution is considered
undercapitalized. Under the regulations, a "well capitalized" institution must
have a Tier 1 capital ratio of at least 6%, a total capital ratio of at least
10% and a leverage ratio of at least 5% and not be subject to a capital
directive order. An "adequately capitalized" institution must have a Tier 1
capital ratio of at least 4%, a total capital ratio of at least 8% and a
leverage ratio of at least 4%, or 3% in some cases. Under these guidelines, as
of December 31, 1996, each of the Banks was considered adequately or well
capitalized.
37
<PAGE>
Banking agencies have recently adopted final regulations which mandate that
regulators take into consideration concentrations of credit risk and risks from
non-traditional activities, as well as an institution's ability to manage those
risks, when determining the adequacy of an institution's capital. This
evaluation will be made as a part of the institution's regular safety and
soundness examination. Banking agencies also have recently adopted final
regulations requiring regulators to consider interest rate risk (when the
interest rate sensitivity of an institution's assets does not match the
sensitivity of its liabilities or its off-balance-sheet position) in the
evaluation of a bank's capital adequacy. Concurrently, banking agencies have
proposed a methodology for evaluating interest rate risk. After gaining
experience with the proposed measurement process, those banking agencies intend
to propose further regulations to establish an explicit risk-based capital
charge for interest rate risk.
DISTRIBUTIONS. NationsBank funds for cash distributions to its shareholders
are derived from a variety of sources, including cash and temporary investments.
The primary source of such funds, however, is dividends received from the Banks.
The amount of dividends that each Bank may declare in a calendar year without
approval of the Comptroller is the Bank's net profits for that year, as defined
by statute, combined with its net retained profits, as defined, for the
preceding two years. In addition, from time to time NationsBank applies for, and
may receive, permission from the Comptroller for one or more of the Banks to
declare special dividends. As of January 1, 1997, the Banks can initiate
dividend payments without prior regulatory approval of up to $1.01 billion plus
an additional amount equal to their net profits for 1996 up to the date of any
such dividend declaration.
In addition to the foregoing, the ability of NationsBank and the Banks to
pay dividends may be affected by the various minimum capital requirements and
the capital and non-capital standards established under FDICIA as described
above. Furthermore, the Comptroller may prohibit the payment of a dividend by a
national bank if it determines that such payment would constitute an unsafe or
unsound practice. The right of NationsBank, its shareholders and its creditors
to participate in any distribution of the assets or earnings of its subsidiaries
is further subject to the prior claims of creditors of the respective
subsidiaries.
SOURCE OF STRENGTH. According to Federal Reserve Board policy, bank holding
companies are expected to act as a source of financial strength to each
subsidiary bank and to commit resources to support each such subsidiary. This
support may be required at times when a bank holding company may not be able to
provide such support. In the event of a loss suffered or anticipated by the
FDIC -- either as a result of default of a banking or thrift subsidiary of
NationsBank or related to FDIC assistance provided to a subsidiary in danger of
default -- the other banking subsidiaries of NationsBank may be assessed for the
FDIC's loss, subject to certain exceptions.
INFORMATION ABOUT FIRST FEDERAL
GENERAL
First Federal is a federally chartered stock savings bank, which began its
operations in 1926 as a Georgia-chartered building and loan association. First
Federal converted to a federal savings and loan association in 1935, conducting
its business under the name Brunswick Federal Savings and Loan Association, and
changed its name to First Federal Savings and Loan Association of Brunswick in
1959. First Federal converted to a federal mutual savings bank on December 5,
1983, and became a federal capital stock savings bank on July 21, 1984. First
Federal primarily engages in the business of attracting deposits from the
general public and investing those funds in real estate, commercial and consumer
loans. First Federal's operations are conducted from its headquarters, two
branch offices in Brunswick, and two branch offices on St. Simon's Island,
Georgia. First Federal's principal executive offices are located at 777
Gloucester Street, Brunswick, Georgia 31520. Its telephone number is (912)
265-1410. As of December 31, 1996, First Federal had total assets of $254
million and approximately 103 full-time and 36 part-time employees.
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to the executive compensation, benefit plans
voting securities and the principal holders thereof, certain relationships and
related transactions and other related matters as to First Federal is
incorporated by reference or set forth in First Federal's Annual Report on Form
10-K for the year ended September 30, 1996, incorporated herein by reference.
Stockholders of First Federal desiring copies of such documents may contact
First Federal at its address or telephone number indicated under "INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE."
38
<PAGE>
SUPERVISION AND REGULATION
GENERAL. First Federal is a member of the Federal Home Loan Bank System and
its deposit accounts are insured up to applicable limits through the SAIF of the
FDIC. First Federal is subject to supervision, regulation, and examination by
the OTS and the FDIC and must file reports with the OTS concerning its
activities and financial condition, in addition to obtaining regulatory approval
prior to entering into certain transactions such as mergers with or acquisitions
of other depository institutions. The OTS also monitors all areas of the
operations of First Federal, including reserves, loans, mortgages, issuances of
securities, payment of dividends, establishment of branches, and capital. The
OTS conducts periodic examinations to determine First Federal's compliance with
various regulatory requirements.
In addition to banking laws, regulations and regulatory agencies, First
Federal is subject to various other laws and regulations, all of which directly
or indirectly affect First Federal's operations, management and the ability to
make distributions. The following discussion summarizes certain aspects of those
laws and regulations that affect First Federal. This summary is qualified in its
entirety by reference to the particular statutory and regulatory provisions
referred to below and is not intended to be an exhaustive description of the
statutes or regulations applicable to First Federal's business. Supervision,
regulation and examination of First Federal by the regulatory agencies are
intended primarily for the protection of depositors rather than the holders of
stock of First Federal.
CAPITAL REQUIREMENTS. The OTS has issued capital guidelines applicable to
savings associations. From time to time, the OTS may require that a savings
association maintain capital above the minimum levels, whether because of its
financial condition or actual or anticipated growth. The capital standards
issued by the OTS include (a) a core capital requirement, (b) a tangible capital
requirement and (c) a risk-based capital requirement.
The core capital standard requires a savings association to maintain "core
capital" of not less than 3% of adjusted total assets. "Core capital" includes
common stockholders' equity (including retained earnings), noncumulative
perpetual preferred stock and related surplus, minority interests in the equity
accounts of fully consolidated subsidiaries, certain nonwithdrawable accounts,
pledged deposits of mutual savings associations, and certain goodwill resulting
from prior regulatory accounting practices. The tangible capital requirement
requires a savings association to maintain tangible capital in an amount not
less than 1.5% of adjusted total assets. "Tangible capital" is defined as core
capital minus intangible assets. The risk-based capital requirement requires a
savings association to maintain risk-based capital of not less than 8% of risk-
weighted assets. Risk-based capital includes core capital and supplementary
capital, provided that the amount of supplementary capital counting toward the
requirement may not exceed core capital.
In calculating the risk-based capital requirement for a savings
association, risk-weighted assets equals total assets plus consolidated
off-balance sheet items, where each asset or item is multiplied by the
appropriate risk weight as described below. Before an off-balance sheet item is
assigned a risk weight, it must be converted to an on-balance sheet credit
equivalent amount. That conversion generally is accomplished by multiplying the
item by either 100%, 50%, 20%, or 0%, whichever is applicable under the OTS
regulations. Each asset and each credit equivalent amount is assigned a risk
weight as follows: (a) 0%, for cash and certain government securities; (b) 20%,
for securities of the United States government or its agencies not backed by the
full faith and credit of the United States government and for high-quality
mortgage-related securities; (c) 50%, for certain revenue bonds and qualifying
residential mortgage loans; or (d) 100%, for most other loans.
First Federal must maintain core capital at least equal to 3.0% of total
adjusted assets and risk-based capital at least equal to 8.0% of risk-weighted
assets. Additionally, First Federal must maintain tangible capital at least
equal to 1.5% of total adjusted assets. The following table presents First
Federal's capital levels at December 31, 1996, relative to these requirements.
<TABLE>
<CAPTION>
AMOUNT PERCENT ACTUAL ACTUAL EXCESS
REQUIRED REQUIRED AMOUNT PERCENT AMOUNT
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Core Capital............................................................. $7,659 3.0% $26,870 10.5% $19,211
Tangible Capital......................................................... 3,829 1.5 26,870 10.5 23,041
Risk-Based Capital....................................................... 14,728 8.0 27,475 14.9(1) 12,747
</TABLE>
(1) Represents risk-based capital as a percentage of risk-weighted assets.
Savings associations with "above normal" interest rate risk exposure are
subject to a deduction from total capital for purposes of calculating their
risk-based capital requirements. A savings association's interest rate risk is
measured by the decline in the net portfolio value of its assets (I.E., the
difference between incoming and outgoing discounted cash flows from
39
<PAGE>
assets, liabilities and off-balance sheet contracts) that generally would result
from a hypothetical 2% increase or decrease in market interest rates divided by
the estimated economic value of the association's assets, as calculated in
accordance with guidelines set forth by the OTS. A savings association whose
measured interest rate risk exposure exceeds 2% must deduct an interest rate
component in calculating its total capital under the risk-based capital rule.
The interest rate risk component is an amount equal to one-half of the
difference between the institution's measured interest rate risk and 2%,
multiplied by the estimated economic value of the association's assets. That
dollar amount is deducted from an association's total capital in calculating
compliance with its risk-based capital requirement. Under the rule, there is a
two-quarter lag between the reporting date of an institution's financial data
and the effective date for the new capital requirement based on that data. The
rule also provides that the Director of the OTS may waive or defer an
association's interest rate risk component on a case-by-case basis.
The OTS also has adopted regulations to implement the system of prompt
corrective action established by law. The rules permit the OTS to take certain
supervisory actions when an insured association falls within one of five
specifically enumerated capital categories. Under the rules, an institution will
be deemed to be (a) "well-capitalized" if the association has a total risk-based
capital ratio of 10% or greater, a Tier 1 risk-based capital ratio of 6% or
greater, and a leverage ratio of 5% or greater, and the association is not
subject to any enforcement agreement relating to capital; (b) "adequately
capitalized" if the association exceeds a risk-based capital ratio of 8%, a Tier
1 risk-based capital ratio of 4%, and a leverage ratio of 4% (3% if the
association has a composite one rating); (c) "undercapitalized" if the
association's risk-based capital ratio is less than 8%, Tier 1 capital ratio is
less than 4%, or leverage ratio is less than 4% (3% if it has a composite one
rating); (d) "significantly undercapitalized" if the association's risk-based
capital is less than 6%, Tier 1 capital ratio is less than 3%, or leverage ratio
is less than 3%; and (e) "critically undercapitalized" if the association has a
ratio of tangible equity to total assets that is 2% or below. The regulations
provide a framework of supervisory actions based on the capital level of an
insured association. Generally, an association may not declare any dividends,
make any other capital distribution, or pay a management fee if, following the
distribution or payment, the institution would be within any one of the three
undercapitalized categories. There is a limited exception to this prohibition
for stock redemptions that do not result in any decrease in an association's
capital and would improve the association's financial condition, provided the
redemption has been approved by the OTS. Institutions that are classified as
undercapitalized also are subject to additional mandatory supervisory actions,
including increased monitoring by the OTS, a requirement to submit a capital
restoration plan, and restrictions on growth of the institution's assets as well
as a limitation on its ability to make acquisitions and open branches. In
addition to the foregoing, a significantly undercapitalized institution may not
pay bonuses or raises to its senior executive officers without prior OTS
approval and also must comply with additional mandatory requirements regarding
the operation of the association in the interim. Based upon the foregoing
regulations and First Federal's capital ratios as of December 31, 1996, First
Federal would be considered in the well-capitalized category.
The Director may grant an exemption from a capital directive imposing
operational restrictions or corrective actions if (a) the exemption would pose
no significant risk to the affected deposit insurance fund; (b) the
association's management is competent; (c) the association is in substantial
compliance with all applicable statutes, regulations, orders, and supervisory
agreements and directives; and (d) the association's management has not engaged
in any activities that have jeopardized the association's safety and soundness
or contributed to impairing its capital. In addition, a savings association that
does not meet applicable capital standards may not increase its assets without
the Director's prior written approval, and in no event may increase its assets
beyond the amount of net interest credited to its deposit liabilities.
In addition to the foregoing prompt corrective action provisions, federal
banking agencies, including the OTS, are required to review their capital
standards every two years to ensure that their standards require sufficient
capital to facilitate prompt corrective action and to minimize loss to the SAIF
and the BIF.
LIMITATION ON CAPITAL DISTRIBUTIONS. The OTS has promulgated a rule
governing capital distributions such as dividends, stock repurchases, and
cash-out mergers by savings associations. The rule establishes three tiers of
institutions. An institution that meets or exceeds its fully phased-in capital
requirement after giving effect to a proposed distribution is considered a "Tier
1 Institution" under the rule and may make aggregate capital distributions
during a calendar year, without prior OTS approval, of up to the greater of (a)
all of its net income to date during the year plus an amount that would reduce
its excess capital ratio to one-half of such excess capital ratio at the
beginning of the calendar year or (b) 75% of its net income over the most recent
four-quarter period. An institution that meets its current regulatory capital
requirement, but not its fully phased-in requirement, after giving effect to a
proposed distribution is a "Tier 2 Institution" and may make capital
distributions without prior OTS approval of up to the following percentage of
net income for the most recent four-quarter period: (a) 75% of such net income
if the association meets its fully phased-in risk-based capital requirements
before the distribution; or (b) 50% of
40
<PAGE>
such net income if the association meets only its current risk-based capital
standards before the distribution. A savings association that fails to meet its
regulatory capital requirements (a "Tier 3 Institution") may not make capital
distributions without the OTS's prior written approval. An institution meeting
the Tier 1 capital criteria but that has been notified by the OTS that it is in
need of more than normal supervision may be treated as a Tier 2 or a Tier 3
institution. As of December 31, 1996, First Federal was a Tier 1 Institution and
would be permitted to distribute 100% of net income and one-half of its excess
capital in a given year. The OTS also has the right to preclude an association
from paying any capital distribution if it would constitute an unsafe or unsound
practice or if the association's capital was decreasing due to substantial
losses.
TRANSACTIONS WITH AFFILIATES. The Federal Reserve Act ("FRA") Sections 23A,
23B, and 22(h) are applicable to savings associations. Those sections limit
extensions of credit to affiliated entities, executive officers, directors, and
10% stockholders. Generally, Sections 23A and 23B (a) limit the extent to which
the insured association or its subsidiaries may engage in certain covered
transactions with an affiliated entity to an amount equal to 10% of such
institution's capital stock and surplus, and place an aggregate limit on all
such transactions with all affiliated institutions of an amount equal to 20% of
such capital stock and surplus, and (b) require that all such transactions be on
terms consistent with safe and sound banking practices. "Covered transactions"
include the making of loans, the purchasing of assets, the issuance of a
guarantee and similar transactions. Federal law also imposes three additional
rules on savings associations: (i) a savings association may not make any
extension of credit to an affiliate unless that affiliate is engaged only in
activities permissible for bank holding companies; (ii) a savings association
may not purchase or invest in securities insured by an affiliate, other than a
subsidiary; and (iii) the Director may impose more stringent restrictions on
savings associations than those set forth in Sections 23A, 23B, and 22(h) of the
FRA.
RESTRICTIONS ON ACQUISITION. Federal law also generally provides that no
company may acquire "control" of an insured savings association without the
Director's prior approval, and that any company that acquires such control
becomes a "savings and loan holding company" subject to registration,
examination, and regulation under applicable law. Federal law does not require
the Director's approval if the acquiring company is a bank holding company
registered pursuant to the BHCA.
Federal law also authorizes the Federal Reserve Board to approve bank
holding company acquisitions of savings associations and provides that the
Federal Reserve Board may not impose "tandem restrictions" in connection with
such approvals.
INSURANCE OF DEPOSIT ACCOUNTS. First Federal's deposit accounts are insured
by the FDIC to the maximum amount permitted by law, currently $100,000 for each
insured account, through the SAIF fund. With respect to assessments paid by
associations, the FDIC historically imposed assessments on each association
based on the institution's assessment risk classification. The rates ranged from
$.23 to $.31 for each $100 of domestic deposits. The rate at which a SAIF member
institution paid assessments was determined on the basis of capital and
supervisory measures. On September 30, 1996, legislation was enacted which,
among other things, imposed a special one-time assessment on SAIF member
institutions, including First Federal, in order to recapitalize the SAIF and
allocate to SAIF and BIF-insured institutions an annual assessment to cover
interest payments on Financing Corp. (FICO) bonds issued in the 1980's to assist
the thrift industry. The special one-time assessment levied by the FDIC amounted
to 65.7 basis points on SAIF assessable deposits held by an institution as of
March 31, 1995. SAIF-insured institutions were required to recognize the special
assessment, which is tax deductible, as of September 30, 1996. Accordingly,
First Federal took a charge of $1.36 million before taxes as a result of the
FDIC special assessment. Beginning on January 1, 1997, SAIF members began paying
an annual assessment of 6.4 basis points on SAIF-insured deposits to cover
interest payments on the FICO bonds. The FDIC also has proposed a base
assessment schedule for SAIF institutions which would range from 4 to 31 basis
points, with an adjusted assessment schedule that would immediately reduce those
rates by 4 basis points. Accordingly, well-capitalized thrifts would effectively
have an assessment rate of zero for deposit insurance, excepting the FICO
assessment of 6.4 basis points discussed above. The new rate applied to all
SAIF-insured institutions effective January 1, 1997.
LOANS TO ONE BORROWER AND CERTAIN LOAN LIMITS. Generally, a savings
association may lend to a single or related group of borrowers, on an unsecured
basis, an amount equal to 15% of its unimpaired capital and surplus. An
additional amount equal to 10% of unimpaired capital and surplus, may be loaned
if secured by readily marketable collateral, which is defined to include
securities and gold bullion, but generally does not include real estate.
Notwithstanding such provisions, a savings association may make loans to one
borrower (a) for any purpose, up to $500,000, or (b) to develop domestic
residential housing units, up to the lesser $30 million or 30% of the
association's unimpaired capital and unimpaired surplus, if certain conditions
are satisfied. In addition, a savings association's loans to one borrower to
finance a sale of real property acquired in satisfaction of debts previously
contracted in good faith may not exceed the 15% limit.
41
<PAGE>
RECENT ACCOUNTING PRONOUNCEMENTS
On October 1, 1995, First Federal adopted SFAS No. 122 "Accounting for
Mortgage Servicing Rights" which among other provisions, requires that the value
of mortgage servicing rights associated with mortgage loans originated by an
entity, which it intends to sell, be capitalized, as assets. The cost of these
mortgage servicing rights is amortized in proportion to, and over the period of,
the estimated net servicing revenues. In connection with the October 1, 1995
adoption of SFAS No. 122, First Federal capitalized mortgage servicing rights of
$149,306 in 1996 and $26,995 during the first quarter of 1997. Amortization of
mortgage servicing rights was $8,815 in 1996 and $7,525 during the first quarter
of 1997. No valuation allowance was recorded during 1996 nor during the first
quarter of 1997. Accordingly, adoption of SFAS No. 122 increased net income
after taxes by $97,049 ($.06 per share) for the year ended September 30, 1996
and $17,547 ($.01 per share) for the quarter ended December 31, 1996. Impairment
of mortgage servicing rights is assessed based on the fair value of those
rights. Fair values are estimated using discounted cash flows based on a current
market interest rate. For purposes of measuring impairment, the rights are
stratified based on the predominant risk characteristics of the underlying
loans. The predominant risk characteristics of First Federal's loans are the
interest rate and loan type. The amount of impairment recognized is the amount
by which the capitalized mortgage servicing rights for a stratum exceed their
fair value.
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation," which First Federal is required
to adopt for fiscal year 1997. SFAS No. 123 would require First Federal to
estimate the value of all stock-based compensation using a recognized pricing
model. First Federal would have the option of recognizing this value as an
expense or by disclosing its effects on its net income. However, First Federal
does not anticipate awarding any stock-based compensation during fiscal year
1997, and therefore the implementation of SFAS No. 123 is not anticipated to
have any effect on First Federal.
COMPARISON OF NATIONSBANK COMMON STOCK
AND FIRST FEDERAL COMMON STOCK
NATIONSBANK
NationsBank is authorized to issue 1,250,000,000 shares of NationsBank
Common Stock, of which 573,492,000 shares were outstanding as of December 31,
1996. NationsBank Common Stock is listed on the NYSE and the PSE under the
trading symbol "NB". NationsBank Common Stock is also listed on the LSE and
certain shares of NationsBank Common Stock are listed on the Tokyo Stock
Exchange. As of December 31, 1996, 120.6 million shares of NationsBank Common
Stock were reserved for issuance under various employee and director benefit
plans of NationsBank and upon conversion of the NationsBank ESOP Convertible
Preferred Stock, Series C (the "ESOP Preferred Stock"); 5.6 million shares were
reserved for issuance under the NationsBank Dividend Reinvestment and Stock
Purchase Plan; up to 220 million shares were reserved for issuance in connection
with the Boatmen's Acquisition; and up to 3.0 million shares were reserved for
issuance in connection with the Merger. After taking into account the shares
reserved as described above, in the number of authorized shares of NationsBank
Common Stock available for other corporate purposes as of December 31, 1996 was
approximately 1,577.4 million.
NationsBank has authorized 45,000,000 shares of preferred stock and may
issue such preferred stock in one or more series, each with such preferences,
limitations, designations, conversion rights, voting rights, distribution
rights, voluntary and involuntary liquidation rights and other rights as it may
determine (the "Preferred Stock"). NationsBank has designated 3,000,000 shares
of ESOP Preferred Stock, of which 2.3 million shares were issued and outstanding
as of December 31, 1996. In addition, on the effective date of the Boatmen's
Acquisition, (i) each share of Boatmen's Series A Preferred Stock was converted
into one share of NationsBank New Series A Preferred Stock; (ii) each share of
Boatmen's Series B Preferred Stock was converted into one share of NationsBank
New Series B Preferred Stock and (iii) each Boatmen's Depositary Share was
converted into one depositary share of NationsBank Depositary Share. The
NationsBank New Series A Preferred Stock, NationsBank New Series B Preferred
Stock and NationsBank Depositary Shares have rights, preferences and terms
substantially identical to the rights, preferences and terms of the Boatmen's
Series A Preferred Stock, Boatmen's Series B Preferred Stock and Boatmen's
Depositary Shares, respectively.
FIRST FEDERAL
First Federal is authorized to issue 4,000,000 shares of First Federal
Common Stock, $1.00 par value, of which 1,530,250 shares were issued and
outstanding as of the Record Date, and 1,000,000 shares of preferred stock, of
which no shares were issued and outstanding as of the Record Date.
42
<PAGE>
The Board of Directors has the authority to issue First Federal preferred
stock in one or more series and to fix the dividend rights, dividend rate,
liquidation preference, conversion rights, voting rights, rights and terms of
redemption (including sinking fund provisions), redemption price or prices, and
the number of shares constituting any such series, without any further action by
the stockholders unless such action is required by applicable rules or
regulations or by the terms of other outstanding series of First Federal
preferred stock. Any shares of First Federal preferred stock which may be issued
may rank prior to shares of First Federal Common Stock as to payment of
dividends and upon liquidation.
COMPARISON OF VOTING AND OTHER RIGHTS
NationsBank is a North Carolina corporation subject to the provisions of
the NCBCA. Stockholders of First Federal, whose rights are governed by First
Federal's Charter and Bylaws and by federal law, will upon consummation of the
Merger, become shareholders of NationsBank. As shareholders of NationsBank,
their rights will then be governed by the NationsBank Articles, the NationsBank
Bylaws and the NCBCA. Except as set forth below, there are no material
differences between the rights of First Federal stockholders under First
Federal's Charter and NationsBank Bylaws and under federal law, on the one hand,
and the rights of NationsBank shareholders under the NationsBank Articles and
Bylaws and the NCBCA, on the other hand.
MEETINGS OF SHAREHOLDERS. A special meeting of NationsBank shareholders may
be called for any purpose by the NationsBank Board of Directors, by the Chairman
of the Board of NationsBank or by the Chief Executive Officer or President of
NationsBank. A quorum for a meeting of NationsBank shareholders is a majority of
the outstanding shares of NationsBank Common Stock entitled to vote. A majority
of the votes cast is generally required for an action by the NationsBank
shareholders. North Carolina law provides that these quorum and voting
requirements may only be increased with approval of NationsBank shareholders.
Under First Federal's Bylaws, unless otherwise prescribed by OTS
regulations, special meetings of the stockholders may be called at any time by
the Chairman of the Board, the President, or a majority of the Board of
Directors, and will be called by the Chairman of the Board, the President, or
the Secretary upon the written request of the holders of at least one-tenth of
the outstanding capital stock of First Federal entitled to vote at the meeting.
A quorum for a meeting of First Federal stockholders is a majority of the
outstanding First Federal Common Stock entitled to vote. A majority of the votes
cast is generally required for an action by the First Federal shareholders.
DISTRIBUTIONS. The payment of distributions to holders of NationsBank
Common Stock is subject to the provisions of the NCBCA, the preferential rights
of the holders of NationsBank Preferred Stock, certain indebtedness of
NationsBank and the ability of the Banks to pay dividends to NationsBank, as
restricted by various bank regulatory agencies. See "INFORMATION ABOUT
NATIONSBANK -- Supervision and Regulation."
The payment of distributions to holders of First Federal Common Stock is
subject to the provisions of Federal law applicable to the declaration of
distributions by a savings association, the preferential rights of any holders
of First Federal preferred stock and the ability of First Federal to pay
dividends as restricted by the OTS. See "INFORMATION ABOUT FIRST
FEDERAL -- Supervision and Regulation."
SIZE AND CLASSIFICATION OF THE BOARD OF DIRECTORS. The size of the
NationsBank Board of Directors may be established by the shareholders or by the
NationsBank Board of Directors, provided that the NationsBank Board of Directors
may not set the number of directors at less than five nor more than 30. Any
change to this permissible range for the size of the NationsBank Board of
Directors must be approved by the NationsBank shareholders. The NationsBank
Board of Directors is not divided into classes, and all directors are elected
annually.
First Federal's Charter provides that the number of First Federal directors
shall not be less than seven nor more than 15, except when a greater number is
approved by the First Federal Board of Directors. First Federal's Bylaws provide
that the Board of Directors is divided into three classes serving staggered
three-year terms, with the terms of one class of directors expiring each year.
REMOVAL OF DIRECTORS. Generally, directors of NationsBank may be removed by
the shareholders with or without cause by the affirmative vote of a majority of
the votes cast, unless the NationsBank Articles are amended to provide
otherwise. In addition, the NCBCA provides that an appropriate court can remove
a director upon petition of the holders of at least 10% of the outstanding
shares of any class of stock of NationsBank upon certain findings by such court.
First Federal's Bylaws provide that any director may be removed for cause,
by the affirmative vote of the holders of a majority of the shares then entitled
to vote in an election of directors, at a stockholders' meeting with respect to
which notice
43
<PAGE>
of such purpose has been expressly given. If less than the entire Board of
Directors is to be removed, no director may be removed if the votes cast against
his removal would be sufficient to elect a director if then cumulatively voted
at an election of the class of directors of which such director is a part.
SHAREHOLDER INSPECTION RIGHTS; SHAREHOLDER LISTS. Under North Carolina law,
qualified shareholders have the right to inspect and copy (a) certain of the
NationsBank official corporate documents and (b) the NationsBank books and
records in good faith and for a proper purpose. Such right of inspection
requires that the shareholder give NationsBank written notice of the demand,
describing with reasonable particularity his purpose and the requested records.
The right of inspection extends not only to shareholders of record but also
beneficial owners whose beneficial ownership is certified to NationsBank by the
shareholder of record. However, NationsBank is under no duty to provide any
accounting records or any records with respect to any matter that it determines
in good faith may, if disclosed, adversely effect NationsBank in the conduct of
its business or may constitute material nonpublic information, and the right of
inspection is limited to NationsBank shareholders who either have been
NationsBank shareholders at least six months or who hold at least 5% of the
outstanding shares of any class of NationsBank stock. In addition, NationsBank
is required to prepare a shareholder list with respect to any shareholders'
meeting and to make such list available to NationsBank shareholders beginning
two business days after notice of such meeting is given and continuing through
such meeting and any adjournments thereof.
OTS regulations applicable to First Federal provide that any stockholder or
group of stockholders holding of record (a) voting shares having a cost of at
least $100,000 or constituting at least 1% of the total outstanding voting
shares, provided in either case that such stockholder or group has held those
shares of record for at least six months, or (b) at least 5% of the total
outstanding voting shares, has the right to examine, with certain exceptions,
books and records of account, minutes, and records of stockholders, upon written
demand stating a proper purpose.
ANTI-TAKEOVER PROVISIONS. First Federal's Charter provides that First
Federal's Board of Directors is divided into three classes serving staggered
three-year terms, with the terms of one class of directors expiring each year.
The purposes of dividing First Federal's Board of Directors into classes is to
facilitate continuity and stability of leadership of First Federal by ensuring
that experienced personnel familiar with the business and policies of First
Federal will be represented on the Board of Directors at all times, and to
permit First Federal's management to plan for a reasonable period into the
future. The effect of First Federal's having a classified Board of Directors is
that only approximately one-third of the members of the Board of Directors is
elected each year, which effectively requires two annual meetings for First
Federal's stockholders to change a majority of the members of the Board of
Directors. By delaying the time in which an acquiror could obtain working
control of the Board of Directors, this provision may discourage some potential
merger proposals, tender offers or other acquisition proposals.
The NationsBank Articles do not contain any anti-takeover provisions.
ANTI-TAKEOVER STATUTES. North Carolina has two anti-takeover statutes in
force, the North Carolina Shareholder Protection Act and the North Carolina
Control Share Acquisition Act which restrict business combinations with, and the
accumulation of shares of voting stock of, North Carolina corporations.
NationsBank has taken action to irrevocably "opt out" of the restrictions
imposed by these statutes.
Any company generally would be required to obtain the approval of the OTS
(or, in certain cases, the Federal Reserve Board) before acquiring control over
First Federal. Generally, the acquisition of 25% or more of the outstanding
First Federal Common Stock, among other things, would constitute control of
First Federal; provided that control may be presumed under OTS regulations once
such person or group of persons owns more than 10% of the outstanding shares of
First Federal Common Stock.
DISSENTER'S RIGHTS. The NCBCA generally provides dissenter's rights for
mergers and share exchanges that require shareholder approval, sales of
substantially all the assets (other than sales that are in the usual and regular
course of business and certain liquidations and court-ordered sales), and
certain amendments to the articles of incorporation of a North Carolina
corporation.
The rights of appraisal of dissenting stockholders of First Federal are
governed by federal regulations applicable to federally chartered thrifts.
Pursuant thereto, except as described below, any stockholder has the right to
demand payment of the fair or appraised value of his stock in the event that
First Federal enters into any combination permissible for a federally chartered
thrift, including permissible mergers, consolidations, and bulk purchases of
assets or assumptions of deposit liabilities. No appraisal rights are available
to a stockholder who is required to accept only "qualified consideration" (cash,
shares of stock of any association or corporation that, at the effective date of
the combination, would be listed on a national securities exchange or quoted on
The Nasdaq Stock Market, or any combination of such cash and stock) for such
holder's stock, if
44
<PAGE>
that stock were listed on a national securities exchange or quoted on The Nasdaq
Stock Market on the date of the meeting at which the combination was acted upon
or if the combination is one of a specified type for which stockholder action is
not required. Because First Federal Common Stock currently is quoted on The
Nasdaq Stock Market, First Federal stockholders generally do not have appraisal
rights in the event of any combination involving First Federal, unless those
stockholders are required to accept something other than "qualified
consideration" for their First Federal Common Stock.
MISCELLANEOUS. Chase Mellon Shareholder Services, L.L.C. acts as transfer
agent and registrar for the NationsBank Common Stock. NationsBank Common Stock
is listed and traded on the NYSE and the PSE. Certain shares of NationsBank
Common Stock are also listed on the LSE and on the Tokyo Stock Exchange.
Wachovia Bank of North Carolina, N.A. acts as transfer agent and registrar
for the First Federal Common Stock. First Federal Common Stock is included for
quotation in The Nasdaq Stock Market under the symbol "FFBG."
LEGAL OPINIONS
The legality of the NationsBank Common Stock to be issued in connection
with the Merger and certain other legal matters in connection with the Merger
will be passed upon by Smith Helms Mulliss & Moore, L.L.P., Charlotte, North
Carolina. As of the date of this Proxy Statement-Prospectus, certain members of
Smith Helms Mulliss & Moore, L.L.P., beneficially owned approximately 160,000
shares of NationsBank Common Stock. Certain tax consequences of the Merger will
be passed upon by King & Spalding. Certain legal matters in connection with the
Merger will be passed upon for First Federal by Smith, Mackinnon, Greeley,
Bowdoin & Edwards, P.A.
EXPERTS
The consolidated financial statements of NationsBank incorporated in this
Proxy Statement-Prospectus by reference to the NationsBank Annual Report on Form
10-K for the year ended December 31, 1995, have been so incorporated in reliance
on the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The consolidated financial statements of Boatmen's at December 31, 1995 and
1994, and for the three years ended December 31, 1995, incorporated in this
Proxy Statement-Prospectus by reference to the NationsBank Current Report on
Form 8-K filed with the Commission on September 6, 1996 (as amended by Forms
8-K/A on September 11, 1996 and November 13, 1996) have been so incorporated in
reliance on the report of Ernst & Young LLP, independent accountants, given on
the authority of said firm as experts in auditing and accounting.
The consolidated financial statements of First Federal incorporated in this
Proxy Statement-Prospectus by reference to the First Federal Annual Report on
Form 10-K for the year ended September 30, 1996 have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are so incorporated in reliance upon the authority of said
firm as experts in auditing and accounting.
SHAREHOLDER PROPOSALS
The 1998 Annual Meeting of Stockholders of First Federal is tentatively
scheduled to be held January 28, 1998, subject to the earlier consummation of
the Merger. In the event that the First Federal 1998 Annual Meeting of
Stockholders is held, proposals of stockholders intended to be presented at that
meeting must be received by First Federal at its executive offices on or before
September 1, 1997, in order to be included in First Federal's Proxy Statement
and form of Proxy relating to such meeting.
OTHER MATTERS
As of the date of this Proxy Statement-Prospectus, the First Federal Board
of Directors knows of no matters that will be presented for consideration at the
Special Meeting other than as described in this Proxy Statement-Prospectus.
However, if any other matters shall properly come before the Special Meeting or
any adjournments or postponements thereof and be voted upon, the enclosed
proxies shall be deemed to confer discretionary authority on the individuals
named as proxies therein to vote the shares represented by such proxies as to
any such matters. The persons named as proxies intend to vote or not to vote in
accordance with the recommendation of the management of First Federal.
45
<PAGE>
APPENDIX A
[Date]
Board of Directors
First Federal Savings Bank of Brunswick, Georgia
777 Gloucester Street
Brunswick, Georgia 31520
Gentlemen:
You have requested our opinion as to the fairness, from a financial point
of view, to the holders of the outstanding common stock of First Federal Savings
Bank of Brunswick, Georgia ("First Federal") of the consideration to be received
in the proposed merger (the "Merger") of Interim First Federal Savings Bank of
Brunswick, Georgia, Charlotte, North Carolina, an interim federal stock savings
bank and a wholly owned subsidiary of NationsBank Corporation ("NationsBank"),
into First Federal. The Merger will be effected pursuant to an agreement between
NationsBank (as successor to C&S/Sovran Corporation, The Citizens and Southern
Corporation, Citizens and Southern Georgia Corporation and The Citizens and
Southern National Bank (collectively, "C&S/Sovran")) and First Federal (the
"Agreement"). The Agreement consists of the Amended and Restated Agreement and
Plan of Reorganization, dated as of November 20, 1989, between NationsBank (as
successor to C&S/Sovran) and First Federal; Amendment Number One to the Amended
and Restated Agreement and Plan of Reorganization, dated as of August 20, 1990,
between NationsBank (as successor to C&S/Sovran) and First Federal; Amendment
Number Two to the Amended and Restated Agreement and Plan of Reorganization,
dated as of December 19, 1990, between NationsBank (as successor to C&S/Sovran)
and First Federal; Order of the Superior Court of Glynn County, Georgia, dated
December 16, 1994; Order of the Superior Court of Glynn County, Georgia, dated
October 11, 1996; letter from First Federal to NationsBank, dated November 12,
1996, regarding the calculation of the Exchange Ratio; and letter from First
Federal to NationsBank, dated December 27, 1996, waiving certain provisions of
the Agreement.
In arriving at our opinion, we, among other things, (i) reviewed the
Agreement; (ii) reviewed annual audited financial statements for First Federal
and NationsBank, interim unaudited financial statements through September 30,
1996 for NationsBank and interim unaudited financial statements through December
31, 1996 for First Federal; (iii) reviewed publicly available information
including recent Office of Thrift Supervision and Securities and Exchange
Commission filings and stockholder communication for First Federal and for
NationsBank, respectively; (iv) met with members of the senior managements of
First Federal and NationsBank to discuss their respective businesses, financial
conditions and operating results; (v) considered the pro forma effects of the
Merger and the Boatmen's Acquisition on NationsBank's financial results and the
pro forma equivalent for the Merger and the Boatmen's Acquisition on First
Federal's financial results; (vi) compared certain financial and stock market
data for First Federal and for NationsBank with similar data for selected
publicly held savings banks and banks; (vii) reviewed the financial terms of
certain recent business combinations in the banking industry; (viii) reviewed
historical market price and volume data for the common stock of First Federal
and the common stock of NationsBank; (ix) reviewed various published research
reports and investment opinions on NationsBank; and (x) performed such other
financial studies and analyses as we deemed appropriate. We were not requested
to and did not solicit the interest of third parties in submitting a competing
offer for the acquisition of First Federal.
In rendering this opinion, we have relied upon the accuracy and
completeness of all financial and other information furnished to us by or on
behalf of First Federal and NationsBank, and other published information that we
considered in our review. We were not requested to and generally have not
undertaken to verify independently the accuracy and completeness of such
information. We have relied upon the reasonableness of all projections and
forecasts provided to us and have assumed that they were prepared in accordance
with accepted practice on bases reflecting the best currently available
estimates and good faith judgments of First Federal and NationsBank managements.
Our opinion herein is based on the circumstances existing and known to us as of
the date hereof. We have not made or obtained any independent evaluations or
appraisals of the assets or liabilities (contingent or otherwise) of either
First Federal or NationsBank, nor were we furnished with any such evaluations or
appraisals. Consequently, we do not express any opinion regarding the value of
any of First Federal's or NationsBank's specific individual assets. We were not
requested to, and therefore did not, participate in the structuring or
negotiating of the Merger. Furthermore, we are not expressing any opinion herein
as to the range of prices at which NationsBank's common stock will trade
subsequent to consummation of the Merger.
A-1
<PAGE>
Interstate/Johnson Lane Corporation, as part of its investment banking
business, is engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. Pursuant to
our engagement in connection with this fairness opinion, we will receive a fee
for our services in rendering said opinion. We are familiar with both First
Federal and NationsBank and have performed investment banking services for both
companies in the past, including having acted as a co-managing underwriter in a
sale of NationsBank senior notes completed October 26, 1993.
The opinion expressed herein is provided to the First Federal Board of
Directors and does not constitute a recommendation to any stockholder of First
Federal as to how any such stockholder should vote on the Merger. The opinion,
and any supporting analysis or other material supplied by us may not be quoted,
referred to, or used in any public filing or in any written document without the
prior written approval of Interstate/Johnson Lane Corporation; provided that we
hereby consent to the inclusion of this letter as Appendix A to the Proxy
Statement-Prospectus to be filed as a part of the Registration Statement on Form
S-4 of NationsBank in connection with the Merger.
Based upon the foregoing considerations, it is our opinion that as of the
date hereof the consideration to be received by the stockholders of First
Federal upon consummation of the Merger is fair, from a financial point of view,
to the stockholders of First Federal.
Sincerely,
INTERSTATE/JOHNSON LANE CORPORATION
A-2
<PAGE>
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
There are no provisions in the Registrant's Restated Articles of
Incorporation and no contracts between the Registrant and its directors and
officers relating to indemnification. The Registrant's Restated Articles of
Incorporation prevent the recovery by the Registrant of monetary damages against
its directors. However, in accordance with the provisions of the NCBCA, the
Registrant's Amended and Restated Bylaws provide that, in addition to the
indemnification of directors and officers otherwise provided by the NCBCA, the
Registrant shall, under certain circumstances, indemnify its directors,
executive officers and certain other designated officers against any and all
liability and litigation expense, including reasonable attorneys' fees, arising
out of their status or activities as directors and officers, except for
liability or litigation expense incurred on account of activities that were at
the time known or reasonably should have been known by such director or officer
to be clearly in conflict with the best interests of the Registrant. Pursuant to
such bylaw and as authorized by statute, the Registrant maintains insurance on
behalf of its directors and officers against liability asserted against such
persons in such capacity whether or not such directors or officers have the
right to indemnification pursuant to the bylaw or otherwise.
In addition to the above-described provisions, Sections 55-8-50 through
55-8-58 of the NCBCA contain provisions prescribing the extent to which
directors and officers shall or may be indemnified. Section 55-8-51 of the NCBCA
permits a corporation, with certain exceptions, to indemnify a current or former
director against liability if (i) he conducted himself in good faith, (ii) he
reasonably believed (x) that his conduct in his official capacity with the
corporation was in its best interests and (y) in all other cases his conduct was
at least not opposed to the corporation's best interests, and (iii) in the case
of any criminal proceeding, he had no reasonable cause to believe his conduct
was unlawful. A corporation may not indemnify a current or former director in
connection with a proceeding by or in the right of the corporation in which the
director was adjudged liable to the corporation or in connection with a
proceeding charging improper personal benefit to him in which he was adjudged
liable on such basis. The above standard of conduct is determined by the Board
of Directors or a committee thereof or special legal counsel or the shareholders
as prescribed in Section 55-8-55.
Sections 55-8-52 and 55-8-56 of the NCBCA require a corporation to
indemnify a director or officer in the defense of any proceeding to which he was
a party because of his capacity as a director or officer against reasonable
expenses when he is wholly successful in his defense, unless the articles of
incorporation provide otherwise. Upon application, the court may order
indemnification of the director or officer if he is adjudged fairly and
reasonably so entitled under Section 55-8-54. Section 55-8-56 allows a
corporation to indemnify and advance expenses to an officer, employee or agent
who is not a director to the same extent as a director or as otherwise set forth
in the corporation's articles of incorporation or bylaws or by resolution of the
Board of Directors.
In addition, Section 55-8-57 permits a corporation to provide for
indemnification of directors, officers, employees or agents, in its articles of
incorporation or bylaws or by contract or resolution, against liability in
various proceedings and to purchase and maintain insurance policies on behalf of
these individuals.
THE FOREGOING IS ONLY A GENERAL SUMMARY OF CERTAIN ASPECTS OF NORTH
CAROLINA LAW DEALING WITH INDEMNIFICATION OF DIRECTORS AND OFFICERS AND DOES NOT
PURPORT TO BE COMPLETE. IT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
RELEVANT STATUTES WHICH CONTAIN DETAILED SPECIFIC PROVISIONS REGARDING THE
CIRCUMSTANCES UNDER WHICH AND THE PERSON FOR WHOSE BENEFIT INDEMNIFICATION SHALL
OR MAY BE MADE AND ACCORDINGLY ARE INCORPORATED HEREIN BY REFERENCE AS EXHIBIT
99.7 TO THIS REGISTRATION STATEMENT.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following exhibits and financial statement schedules are filed with or
incorporated by reference in this Registration Statement:
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO.
<C> <S>
2.1 Amended and Restated Agreement and Plan of Reorganization, dated as of November 20, 1989, among NationsBank
(as successor to C&S/Sovran) and First Federal *
2.2 Amendment Number One to the Amended and Restated Agreement and Plan of Reorganization, dated as of August
20, 1990, among NationsBank (as successor to C&S/Sovran) and First Federal *
2.3 Amendment Number Two to the Amended and Restated Agreement and Plan of Reorganization, dated as of December
19, 1990, among NationsBank (as successor to C&S/Sovran) and First Federal *
2.4 Order of the Superior Court of Glynn County, Georgia, dated December 16, 1994 *
2.5 Order of the Superior Court of Glynn County, Georgia, dated October 11, 1996 *
2.6 Letter from First Federal to NationsBank, dated November 12, 1996 *
2.7 Letter from First Federal to NationsBank, dated January 17, 1997 *
5.1 Opinion of Smith Helms Mulliss & Moore, L.L.P. regarding legality of shares *
8.1 Opinion of King & Spaulding regarding federal income tax consequences
10.1 Letter from McAlpin & Henson to First Federal, dated September 27, 1991 *
10.2 Letter from McAlpin & Henson to First Federal, dated March 16, 1993 *
10.3 Letter from First Federal to Whelchel Brown Readdick & Bumgartner and McAlpin & Henson, dated April 22, 1994
*
10.4 Letter from McAlpin & Henson to First Federal, dated November 8, 1996 *
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Ernst & Young LLP
23.4 Consent of Smith Helms Mulliss & Moore, L.L.P. (included in Exhibit 5.1)
23.5 Consent of Interstate/Johnson Lane Corporation
23.6 Consent of King & Spalding (included in Exhibit 8.1)
24.1 Power of Attorney and Certified Resolutions *
99.1 Notice of Special Meeting of Stockholders of First Federal
99.2 Form of Proxy for Special Meeting of Stockholders of First Federal
99.3 President's letter to First Federal Stockholders
99.4 First Federal Annual Report on Form 10-K for the year ended September 30, 1996 *
99.5 First Federal Quarterly Report on Form 10-Q for the three months ended December 31, 1996
99.6 Opinion of Interstate/Johnson Lane Corporation (included as Appendix A to the Prospectus-Proxy Statement)
99.7 Provisions of North Carolina law regarding indemnification of directors and officers (incorporated herein by
reference to Exhibit 99.1 of the NationsBank Registration Statement on Form S-3, Registration No. 33-63097)
99.8 First Federal Current Report on Form 8-K filed February 3, 1997.
</TABLE>
* Previously filed
ITEM 22. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was
II-2
<PAGE>
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change in such information in the registration statement:
PROVIDED, HOWEVER, that paragraphs (a)(1) (i) and (a)(1) (ii) do not apply
if the Registration Statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA FIDE offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(c) (1) The undersigned Registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The Registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the Registration Statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
BONA FIDE offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(e) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(f) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Charlotte, State of North Carolina, on March 6, 1997.
NATIONSBANK CORPORATION
By: HUGH L. MCCOLL, JR.*
HUGH L. MCCOLL, JR.
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
HUGH L. MCCOLL, JR.* Chief Executive Officer and Director March 6, 1997
HUGH L. MCCOLL, JR. (Principal Executive Officer)
JAMES H. HANCE, JR.* Vice Chairman and Chief Financial Officer March 6, 1997
JAMES H. HANCE, JR. (Principal Financial Officer)
MARC D. OKEN* Executive Vice President and Chief Accounting March 6, 1997
MARC D. OKEN Officer (Principal Accounting Officer)
Chairman of the Board and Director
ANDREW B. CRAIG, III
RONALD W. ALLEN* Director March 6, 1997
RONALD W. ALLEN
RAY C. ANDERSON* Director March 6, 1997
RAY C. ANDERSON
WILLIAM M. BARNHARDT* Director March 6, 1997
WILLIAM M. BARNHARDT
Director
B.A. BRIDGEWATER, JR.
THOMAS E. CAPPS* Director March 6, 1997
THOMAS E. CAPPS
CHARLES W. COKER* Director March 6, 1997
CHARLES W. COKER
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
THOMAS G. COUSINS* Director March 6, 1997
THOMAS G. COUSINS
ALAN T. DICKSON* Director March 6, 1997
ALAN T. DICKSON
W. FRANK DOWD, JR.* Director March 6, 1997
W. FRANK DOWD, JR.
PAUL FULTON* Director March 6, 1997
PAUL FULTON
TIMOTHY L. GUZZLE* Director March 6, 1997
TIMOTHY L. GUZZLE
Director
C. RAY HOLMAN
W. W. JOHNSON* Director March 6, 1997
W. W. JOHNSON
Director
RUSSELL W. MEYER, JR.
Director
JOHN J. MURPHY
Director
RICHARD B. PRIORY
JOHN C. SLANE* Director March 6, 1997
JOHN C. SLANE
O. TEMPLE SLOAN, JR.* Director March 6, 1997
O. TEMPLE SLOAN, JR.
JOHN W. SNOW* Director March 6, 1997
JOHN W. SNOW
MEREDITH R. SPANGLER* Director March 6, 1997
MEREDITH R. SPANGLER
ROBERT H. SPILMAN* Director March 6, 1997
ROBERT H. SPILMAN
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
Director
ALBERT E. SUTER
RONALD TOWNSEND* Director March 6, 1997
RONALD TOWNSEND
Director March 6, 1997
E. CRAIG WALL, JR.
JACKIE M. WARD* Director March 6, 1997
JACKIE M. WARD
VIRGIL R. WILLIAMS* Director March 6, 1997
VIRGIL R. WILLIAMS
* By: /s/ CHARLES M. BERGER
CHARLES M. BERGER
ATTORNEY-IN-FACT
</TABLE>
II-6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. DESCRIPTION PAGE NO.
<C> <S> <C>
2.1 Amended and Restated Agreement and Plan of Reorganization, dated as of
November 20, 1989, among NationsBank (as successor to C&S/Sovran) and
First Federal *
2.2 Amendment Number One to the Amended and Restated Agreement and Plan of
Reorganization, dated as of August 20, 1990, among NationsBank (as
successor to C&S/Sovran) and First Federal *
2.3 Amendment Number Two to the Amended and Restated Agreement and Plan of
Reorganization, dated as of December 19, 1990, among NationsBank (as
successor to C&S/Sovran) and First Federal *
2.4 Order of the Superior Court of Glynn County, Georgia, dated December 16,
1994 *
2.5 Order of the Superior Court of Glynn County, Georgia, dated October 11,
1996 *
2.6 Letter from First Federal to NationsBank, dated November 12, 1996 *
2.7 Letter from First Federal to NationsBank, dated January 17, 1997 *
5.1 Opinion of Smith Helms Mulliss & Moore, L.L.P. regarding legality of
shares *
8.1 Opinion of King & Spalding regarding federal income tax consequences
10.1 Letter from McAlpin & Henson to First Federal, dated September 27, 1991 *
10.2 Letter from McAlpin & Henson to First Federal, dated March 16, 1993 *
10.3 Letter from First Federal to Whelchel Brown Readdick & Bumgartner and
McAlpin & Henson, dated April 22, 1994 *
10.4 Letter from McAlpin & Henson to First Federal, dated November 8, 1996 *
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Ernst & Young LLP
23.4 Consent of Smith Helms Mulliss & Moore, L.L.P. (included in Exhibit 5.1)
23.5 Consent of Interstate/Johnson Lane Corporation
23.6 Consent of King & Spalding (included in Exhibit 8.1)
24.1 Power of Attorney and Certified Resolutions *
99.1 Notice of Special Meeting of Stockholders of First Federal
99.2 Form of Proxy for Special Meeting of Stockholders of First Federal
99.3 President's letter to First Federal Stockholders
99.4 First Federal Annual Report on Form 10-K for the year ended September 30,
1996 *
99.5 First Federal Quarterly Report on Form 10-Q for the three months ended
December 31, 1996
99.6 Opinion of Interstate/Johnson Lane Corporation (included as Appendix A to
the Prospectus-Proxy Statement)
99.7 Provisions of North Carolina law regarding indemnification of directors
and officers (incorporated herein by reference to Exhibit 99.1 of the
NationsBank Registration Statement on Form S-3, Registration No. 33-63097)
99.8 First Federal Current Report on Form 8-K filed February 3, 1997
</TABLE>
* Previously filed
KING & SPALDING
191 PEACHTREE STREET
ATLANTA, GEORGIA 30303-1763
TELEPHONE: 404/572-4600
FACSIMILE: 404/572-5100
DIRECT DIAL: DIRECT FAX:
404/572-3353 404/572-5147
March 5, 1997
First Federal Savings Bank
of Brunswick, Georgia
777 Gloucester Street
Brunswick, Georgia 31520
NationsBank Corporation
100 North Tryon Street
Charlotte, North Carolina 28255
Re: Federal Income Tax Consequences of Merger of Interim First Federal
Savings Bank of Brunswick, a Wholly Owned Subsidiary of NationsBank
Corporation, with and into First Federal Savings Bank of Brunswick,
Georgia
Ladies and Gentlemen:
We have acted as special tax counsel to First Federal Savings Bank of
Brunswick, Georgia ("First Federal") in connection with the proposed merger
(the "Merger") of Interim First Federal Savings Bank of Brunswick ("Merger
Sub"), a wholly owned subsidiary of NationsBank Corporation ("NationsBank"),
with and into First Federal pursuant to the following documents (collectively,
the "Agreement"): (1) the Amended and Restated Agreement and Plan of
Reorganization, dated as of November 20, 1989, between NationsBank (as
successor to C&S/Sovran Corporation, The Citizens and Southern Corporation,
Citizens and Southern Georgia Corporation, and The Citizens and Southern
National Bank (collectively, "C&S/Sovran")) and First Federal (the "Restated
Agreement"); (2) Amendment Number One to the Amended and Restated Agreement
and Plan of Reorganization, dated as of August 20, 1990, between NationsBank
(as successor to C&S/Sovran) and First Federal ("Amendment No. 1"); (3)
Amendment Number Two to the Amended and Restated Agreement and Plan of
Reorganization, dated as of December 19, 1990, between NationsBank (as
successor to C&S/Sovran) and First Federal ("Amendment No. 2"); (4) Order of
the Superior Court of Glynn County, Georgia, dated December 16, 1994 (the
"First Order"); (5) Order of the Superior Court of Glynn County, Georgia,
dated October 11, 1996 (the "Second Order"); (6) the letter from First
Federal to NationsBank, dated November 12, 1996, regarding the calculation
of the Exchange Ratio (the
<PAGE>
First Federal Savings Bank
of Brunswick, Georgia
NationsBank Corporation
March 5, 1997
Page 2
"Share Calculation Letter"); and (7) the letter from First Federal to
NationsBank, dated January 17, 1997, regarding the waiver of certain
provisions of the aforementioned documents (the "Waiver Letter"). You have
requested our opinion regarding certain of the federal income tax consequences
of the Merger.
We understand that our opinion will be referred to in the Proxy Statement-
Prospectus which is part of the Registration Statement on Form S-4 filed with
the Securities and Exchange Commission in connection with the Merger (the
"Registration Statement"). We hereby consent to such use of our opinion.
All capitalized terms used herein without definition have the respective
meanings specified in the Registration Statement, and all references herein to
the Code are to the Internal Revenue Code of 1986, as amended.
INFORMATION RELIED ON
In rendering the opinions expressed herein, we have examined such documents
as we have deemed appropriate, including the Agreement and the Registration
Statement. In our examination of documents, we have assumed, with your consent,
that all documents submitted to us as photocopies or telecopies faithfully
reproduce the originals thereof, that such originals are authentic, that all
such documents have been or will be duly executed to the extent required, and
that all statements of fact set forth in such documents are accurate. In
addition, we have obtained such additional information and representations as
we have deemed relevant and necessary through consultation with various
representatives of NationsBank and First Federal, including written certificates
from NationsBank and First Federal verifying certain relevant facts that have
been represented to us.
Based upon the foregoing, we have assumed, with your consent, that the
following statements are true and correct on the date hereof and will be true on
the Effective Date:
1. The Merger will be consummated in compliance with the material
terms of the Agreement; none of the material terms and conditions therein have
been waived or modified (except as provided in the documents that collectively
comprise the Agreement); and neither NationsBank nor First Federal has any plan
or intention to waive or modify any such material term or condition.
2. The terms of the Merger have resulted from negotiations of the
parties and litigation conducted at arm's length.
<PAGE>
First Federal Savings Bank
of Brunswick, Georgia
NationsBank Corporation
March 5, 1997
Page 3
3. There is no plan or intention by any First Federal stockholder
to sell, exchange, or otherwise to dispose of a number of shares of NationsBank
Common Stock that will be received in the Merger that would reduce the First
Federal stockholders' aggregate ownership of NationsBank Common Stock to a
number of shares having a value, as of the Effective Date, of less than 50
percent of the value of all of the formerly outstanding First Federal Common
Stock as of the Effective Date. For purposes of this assumption, shares of First
Federal Common Stock exchanged for cash in lieu of fractional shares of
NationsBank Common Stock will be treated as outstanding First Federal Common
Stock as of the Effective Date. In addition, shares of First Federal Common
Stock and shares of NationsBank Common Stock held by First Federal stockholders
and otherwise sold, redeemed, or disposed of prior or subsequent to the Merger
will be considered in making this assumption.
4. Following the Merger, First Federal will hold at least 90
percent of the fair market value of the net assets and at least 70 percent of
the fair market value of the gross assets held by it immediately prior to the
Merger. In addition, First Federal will hold at least 90 percent of the fair
market value of the net assets and at least 70 percent of the fair market value
of the gross assets held by Merger Sub immediately prior to the Merger. For
purposes of this assumption, amounts used by First Federal or Merger Sub to pay
reorganization expenses and all redemptions and distributions (except for
regular, normal dividends) made by First Federal or Merger Sub will be included
as assets held by First Federal or Merger Sub, respectively, immediately prior
to the Merger, and any claim of First Federal against NationsBank arising from
the Agreement and any litigation expenses incurred by First Federal in
proceedings against NationsBank will be disregarded.
5. Prior to the Merger, NationsBank will directly own all of the
outstanding shares of stock of Merger Sub.
6. First Federal has no plan or intention to issue additional shares
of its stock that would result in NationsBank, following the Merger, owning less
than 80 percent of the total combined voting power of all classes of First
Federal stock entitled to vote or less than 80 percent of the total number of
shares of all other classes of First Federal stock.
7. NationsBank has no plan or intention to reacquire any of the
shares of NationsBank Common Stock issued in the Merger. NationsBank may,
however, acquire NationsBank Common Stock from time to time through purchases
on an anonymous basis on the open market at open market prices. Such purchases
will not be directed toward the former First Federal shareholders.
8. NationsBank has no plan or intention following the Merger to
liquidate First Federal; to merge First Federal with or into another
corporation; to sell or otherwise to
<PAGE>
First Federal Savings Bank
of Brunswick, Georgia
NationsBank Corporation
March 5, 1997
Page 4
dispose of any of the stock of First Federal; or to cause First Federal to sell
or otherwise to dispose of any of its assets, except for dispositions made in
the ordinary course of business.
9. Merger Sub will have no liabilities that will be assumed by First
Federal in the Merger, and will not transfer to First Federal in the Merger any
asset subject to any liability.
10. Following the Merger, First Federal will continue its historic
business or use a significant portion of its historic business assets in a
business.
11. NationsBank, Merger Sub, First Federal, and the stockholders of
First Federal will pay their respective expenses, if any, incurred in connection
with the Merger.
12. There is no intercorporate indebtedness existing between
NationsBank and First Federal or between Merger Sub and First Federal that was,
or will be, issued, acquired, or settled at a discount.
13. In the Merger, NationsBank will acquire shares of First Federal
Common Stock representing at least 80 percent of the total combined voting power
of all classes of First Federal stock entitled to vote and at least 80 percent
of the total number of shares of all other classes of First Federal stock,
solely in exchange for voting stock of NationsBank. For purposes of this
assumption, shares of First Federal Common Stock exchanged for cash or other
property originating with NationsBank will be treated as outstanding stock of
First Federal on the Effective Date.
14. On the Effective Date, First Federal will not have outstanding any
warrants, options, convertible securities, or any other type of right pursuant
to which any person could acquire stock of First Federal that, if exercised or
converted, would affect NationsBank's acquisition or retention of First Federal
Common Stock representing at least 80 percent of the total combined voting power
of all classes of First Federal stock entitled to vote and at least 80 percent
of the total number of shares of all other classes of First Federal stock.
15. NationsBank owns 100 shares of First Federal Common Stock.
NationsBank does not own, and will not own prior to the Effective Date, directly
or indirectly, any other capital stock of First Federal, nor has NationsBank
owned, directly or indirectly, any other capital stock of First Federal during
the past five years.
16. Neither NationsBank, Merger Sub, nor First Federal is a regulated
investment company, a real estate investment trust, or a corporation 50 percent
or more of the value of whose total assets (excluding cash, cash items,
receivables and U.S. government securities) are stock or securities and 80
percent or more of the value of whose total assets are
<PAGE>
First Federal Savings Bank
of Brunswick, Georgia
NationsBank Corporation
March 5, 1997
Page 5
assets held for investment. For purposes of the 50 percent and 80 percent
determinations under the preceding sentence, stock and securities in any
subsidiary corporation shall be disregarded, and the parent corporation shall be
deemed to own its ratable share of the subsidiary's assets. A corporation shall
be considered a subsidiary for purposes of this paragraph if the parent owns 50
percent or more of the combined voting power of all classes of stock entitled to
vote, or 50 percent or more of the total value of shares of all classes of stock
outstanding.
17. On the Effective Date, the fair market value of the assets of
First Federal will exceed the sum of its liabilities, plus the amount of
liabilities, if any, to which the assets are subject.
18. First Federal is not under the jurisdiction of a court in a case
under Title 11 of the United States Code or a receivership, foreclosure, or
similar proceeding in a federal or state court.
19. None of the compensation received by any stockholder-employee of
First Federal will be separate consideration for, or allocable to, any of his or
her shares of First Federal Common Stock; none of the shares of NationsBank
Common Stock that will be received in the Merger by any stockholder-employee of
First Federal in exchange for First Federal Common Stock will be separate
consideration for, or allocable to, any employment agreement; and the
compensation paid to any stockholder-employee of First Federal following the
Merger will be for services actually rendered and will be commensurate with
amounts paid to third parties bargaining at arm's length for similar services.
20. The payment of cash in lieu of fractional shares of NationsBank
Common Stock is solely for the purpose of avoiding the expense and inconvenience
to NationsBank of issuing fractional shares and does not represent separately
bargained-for consideration. The total cash consideration that will be paid in
the Merger to First Federal stockholders instead of issuing fractional shares of
NationsBank Common Stock will not exceed one percent of the total consideration
that will be issued in the Merger to First Federal stockholders in exchange for
their shares of First Federal Common Stock. The fractional share interests of
each First Federal stockholder will be aggregated, and no First Federal
stockholder will receive cash in an amount equal to or greater than the value of
one full share of NationsBank Common Stock.
OPINIONS
Based upon the foregoing, it is our opinion that:
(1) The Merger will constitute a "reorganization" within the
meaning of Sections 368(a)(1)(A) and (a)(2)(E) of the Code;
<PAGE>
First Federal Savings Bank
of Brunswick, Georgia
NationsBank Corporation
March 5, 1997
Page 6
(2) No gain or loss will be recognized by First Federal stockholders
upon the exchange in the Merger of their First Federal Common Stock for
NationsBank Common Stock (including any fractional share of NationsBank Common
Stock deemed to have been received);
(3) The tax basis of the NationsBank Common Stock received in the
Merger by a First Federal stockholder (including any fractional share of
NationsBank Common Stock deemed to have been received) will be the same as the
tax basis of the First Federal Common Stock exchanged for such NationsBank
Common Stock;
(4) The holding period of the NationsBank Common Stock received in
the Merger by a First Federal stockholder (including any fractional share of
NationsBank Common Stock deemed to have been received) will include the holding
period of such stockholder in the First Federal Common Stock exchanged for such
NationsBank Common Stock, provided that the First Federal Common Stock is held
as a capital asset on the Effective Date;
(5) A First Federal stockholder who receives cash in the Merger in
lieu of a fractional share interest in NationsBank Common Stock will recognize
a taxable gain or loss, measured by the difference between the amount of cash
received and the portion of the basis of the share of First Federal Common Stock
allocable to such fractional share interest. Such gain or loss will be capital
gain or loss, provided that such share of First Federal Common Stock is held as
a capital asset on the Effective Date, and will be long-term capital gain or
loss if such share of First Federal Common Stock will have been held by the
First Federal stockholder for more than one year.
The opinions expressed herein are based upon existing statutory, regulatory,
and judicial authority, any of which may be changed at any time with retroactive
effect. In addition, our opinions are based solely on the documents that we have
examined, the additional information that we have obtained, and the statements
of fact set out herein that we have assumed, with your consent, to be true and
correct. Our opinions cannot be relied upon if any of the facts contained in
such documents or in any such additional information is, or later becomes,
inaccurate or if any of the assumed facts set out herein is, or later becomes,
inaccurate. Finally, our opinions are limited to the tax matters specifically
covered thereby, and we have not been asked to address, nor have we addressed,
any other tax consequences of the Merger.
Very truly yours,
/s/ King & Spalding
King & Spalding
<PAGE>
<PAGE>
EXHIBIT 23.1
CONSENT OF PRICE WATERHOUSE LLP
We hereby consent to the incorporation by reference in the Proxy
Statement-Prospectus constituting part of this Registration Statement on Form
S-4 of NationsBank Corporation of our report dated January 12, 1996, which
appears on page 46 of NationsBank Corporation's 1995 Annual Report to
Shareholders, which is incorporated by reference in its Annual Report on Form
10-K for the year ended December 31, 1995. We also consent to the reference to
us under the heading "EXPERTS" in such Proxy Statement-Prospectus.
PRICE WATERHOUSE LLP
Charlotte, North Carolina
March 5, 1997
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Form S-4 registration statement of our report dated
December 16, 1996, incorporated by reference in First Federal Savings Bank of
Brunswick, Georgia's Form 10-K for the year ended September 30, 1996, and to all
references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 5, 1997
<PAGE>
EXHIBIT 23.3
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related prospectus of NationsBank
Corporation for the registration of 2,448,400 shares of its common stock and to
the incorporation by reference therein of our report dated January 18, 1996
(except for the pooling of interests with Fourth Financial Corporation as of
January 31, 1996, and Note 3, for which the date is January 31, 1996) with
respect to the supplemental consolidated financial statements of Boatmen's
Bancshares, Inc. for the three years ended December 31, 1995, 1994 and 1993
incorporated by reference in NationsBank Corporation's Current Report on Form
8-K dated September 6, 1996 (as amended by Form 8-K/A-1 on September 11, 1996,
and Form 8-K/A-2 on November 13, 1996), as filed with the Securities and
Exchange Commission.
ERNST & YOUNG LLP
St. Louis, Missouri
March 4, 1997
<PAGE>
EXHIBIT 23.5
CONSENT OF INTERSTATE/JOHNSON LANE
We hereby consent to the use of our written opinion to the Board of
Directors of First Federal Savings Bank of Brunswick, Georgia ("First Federal")
attached as Appendix A to the Proxy Statement/Prospectus which forms a part of
the Registration Statement on Form S-4 relating to the proposed merger of a
wholly owned subsidiary of NationsBank Corporation with and into First Federal
and to the references to such opinion and to us in such Proxy
Statement/Prospectus.
INTERSTATE/JOHNSON LANE CORPORATION
By: Rick Steingraber
Title: Senior Managing Director
March 6, 1997
<PAGE>
EXHIBIT 99.1
FIRST FEDERAL SAVINGS BANK OF BRUNSWICK, GEORGIA
777 GLOUCESTER STREET
BRUNSWICK, GEORGIA 31520
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON
APRIL 11, 1997
Notice is hereby given that a Special Meeting of Stockholders of First
Federal Savings Bank of Brunswick, Georgia ("First Federal") will be held at the
St. Simons Island Club located at 100 Kings Way, St. Simons Island, Georgia
31522, on Friday, April 11, 1997, at 10:30 A..M., Eastern Daylight Savings Time
(the "Special Meeting"), for the following purposes:
1. ACQUISITION BY NATIONSBANK CORPORATION. To consider and vote upon
approval of an Amended and Restated Agreement and Plan of Reorganization, dated
as of November 20, 1989, between NationsBank Corporation ("NationsBank") (as
successor to C&S/Sovran Corporation, The Citizens and Southern Corporation,
Citizens and Southern Georgia Corporation and The Citizens and Southern National
Bank (collectively, "C&S/Sovran")) and First Federal; Amendment Number One to
the Amended and Restated Agreement and Plan of Reorganization, dated as of
August 20, 1990, between NationsBank (as successor to C&S/Sovran) and First
Federal; Amendment Number Two to the Amended and Restated Agreement and Plan of
Reorganization, dated as of December 19, 1990, between NationsBank (as successor
to C&S/Sovran) and First Federal; Order of the Superior Court of Glynn County,
Georgia, dated December 16, 1994; Order of the Superior Court of Glynn County,
Georgia dated October 11, 1996; letter from First Federal to NationsBank, dated
November 12, 1996, regarding the calculation of the number of shares of
NationsBank common stock to be received by First Federal stockholders in the
transaction; and letter from First Federal to NationsBank, dated January 17,
1997, waiving certain provisions of the foregoing Amendments Number One and Two
(collectively, the foregoing are referred to as the "Agreement") and the
transactions contemplated thereby. Pursuant to the Agreement, a wholly owned
subsidiary of NationsBank would merge with and into First Federal, and each
outstanding share of First Federal common stock would be converted into the
right to receive 1.60 shares of NationsBank common stock, all as described more
fully in the accompanying Proxy Statement-Prospectus.
2. OTHER BUSINESS. To transact such other or further business as may
properly come before the Special Meeting and any adjournment or postponement
thereof.
Only stockholders of record at the close of business on March 3, 1997, are
entitled to notice of and to vote at the Special Meeting or any adjournment or
postponement thereof.
BY ORDER OF THE BOARD OF DIRECTORS
BEN T. SLADE, III
CHAIRMAN OF THE BOARD
March 14, 1997
BECAUSE THE AFFIRMATIVE VOTE OF AT LEAST TWO-THIRDS OF THE OUTSTANDING
SHARES OF FIRST FEDERAL COMMON STOCK IS REQUIRED TO APPROVE THE AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY, WE URGE YOU TO SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU INTEND TO ATTEND THE
MEETING IN PERSON. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO ITS EXERCISE IN
THE MANNER DESCRIBED IN THE ATTACHED PROXY STATEMENT-PROSPECTUS. ANY STOCKHOLDER
PRESENT AT THE SPECIAL MEETING, INCLUDING ANY ADJOURNMENTS OR POSTPONEMENTS
THEREOF, MAY REVOKE HIS OR HER PROXY AND VOTE IN PERSON ON EACH MATTER BROUGHT
BEFORE THE SPECIAL MEETING.
<PAGE>
<PAGE>
EXHIBIT 99.2
REVOCABLE
FIRST FEDERAL SAVINGS BANK OF BRUNSWICK, GEORGIA
PROXY
PROXY SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 11, 1997.
The undersigned hereby appoints Robert E. Strange and Gerry Earp, or either
of them with individual power of substitution, proxies to vote all shares of the
Common Stock of First Federal Savings Bank of Brunswick, Georgia ("First
Federal") which the undersigned may be entitled to vote at the Special Meeting
of Stockholders to be held at the St. Simons Island Club, 100 Kings Way, St.
Simons Island, Georgia on Friday, April 11, 1997, at 10:30 A.M., Eastern
Daylight Savings Time, and at any adjournment thereof.
SAID PROXIES WILL VOTE ON THE PROPOSALS SET FORTH IN THE NOTICE OF SPECIAL
MEETING AND PROXY STATEMENT AS SPECIFIED ON THIS CARD. IF A VOTE IS NOT
SPECIFIED, SAID PROXIES WILL VOTE IN FAVOR OF PROPOSAL 1. IF ANY OTHER MATTERS
PROPERLY COME BEFORE THE SPECIAL MEETING, SAID PROXIES WILL VOTE ON SUCH MATTERS
AS DETERMINED BY A MAJORITY OF THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR:
1. FOR or WITHOUT , authority to vote on the approval of: an Amended
and Restated Agreement and Plan of Reorganization, dated as of November
20, 1989, between NationsBank Corporation ("NationsBank") (as successor
to C&S/Sovran Corporation, The Citizens and Southern Corporation,
Citizens and Southern Georgia Corporation and The Citizens and Southern
National Bank (collectively, "C&S/Sovran")) and First Federal;
Amendment Number One to the Amended and Restated Agreement and Plan of
Reorganization, dated as of August 20, 1990, between NationsBank (as
successor to C&S/Sovran) and First Federal; Amendment Number Two to the
Amended and Restated Agreement and Plan of Reorganization, dated as of
December 19, 1990, between NationsBank (as successor to C&S/Sovran) and
First Federal; Order of the Superior Court of Glynn County, Georgia,
dated December 16, 1994; Order of the Superior Court of Glynn County,
Georgia dated October 11, 1996; letter from First Federal to
NationsBank, dated November 12, 1996, regarding the calculation of the
number of shares of NationsBank common stock to be received by First
Federal stockholders in the transaction; and letter from First Federal
to NationsBank, dated January 17, 1997, waiving certain provisions of
the foregoing Amendments Number One and Two and the transactions
contemplated thereby.
<PAGE>
EXHIBIT 99.3
FIRST FEDERAL SAVINGS BANK
OF BRUNSWICK, GEORGIA
March 14 ,1997
TO THE STOCKHOLDERS OF
FIRST FEDERAL SAVINGS BANK OF BRUNSWICK, GEORGIA
You are cordially invited to attend a Special Meeting of Stockholders of
First Federal Savings Bank of Brunswick, Georgia ("First Federal"), which will
be held at the St. Simons Island Club located at 100 Kings Way, St. Simons
Island, Georgia, on Friday, April 11, 1997, at 10:30 A.M., Eastern Daylight
Savings Time ("Special Meeting").
At the Special Meeting you will be asked to consider and vote upon
agreements pursuant to which a wholly owned subsidiary of NationsBank
Corporation would merge with and into First Federal (the "Merger"). Upon
consummation of the Merger, each outstanding share of First Federal common stock
would be converted into the right to receive 1.60 shares of NationsBank common
stock. NationsBank common stock is traded on the New York Stock Exchange, Inc.
The proposed Merger has been unanimously approved by your Board of
Directors as being in the best interests of First Federal and its stockholders.
Accordingly, your Board unanimously recommends that you vote FOR approval of the
agreements and the Merger.
Consummation of the Merger is subject to certain conditions, including
approval of the agreements and the Merger by First Federal's stockholders and
approval of the Merger by various regulatory agencies. The enclosed Notice of
Special Meeting of Stockholders and Proxy Statement-Prospectus describes the
Merger and provides specific information concerning the Special Meeting. Please
read these materials carefully and consider the information contained in them.
IT IS VERY IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE SPECIAL
MEETING, REGARDLESS OF WHETHER YOU PLAN TO ATTEND IN PERSON. The affirmative
vote of at least two-thirds of all of the outstanding shares of First Federal
common stock is required to approve the agreements and the Merger. Consequently,
a failure to vote will have the same effect as a vote against the proposal.
Therefore, I urge you to execute, date and return the enclosed Proxy Card in the
enclosed postage-paid envelope as soon as possible to ensure that your shares
will be voted at the Special Meeting. You should not forward any of your stock
certificates at this time.
On behalf of the Board of Directors, I urge you to vote FOR approval of the
agreements and the Merger.
Sincerely,
BEN T. SLADE, III
CHAIRMAN OF THE BOARD
<PAGE>
Office of Thrift Supervision
Department of the Treasury
1700 G Street
Washington, D. C. 20552
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 18 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For Quarter Ended: December 31, 1996 Commission file Number: 3175
FIRST FEDERAL SAVINGS BANK OF BRUNSWICK, GEORGIA
State of Georgia IRS Employer No. 58-0175025
Address: 777 Gloucester Street, Brunswick, Georgia 31520
Telephone: 912-265-1410
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes___ No___
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date:
1,528,250 shares as of February 13, 1997
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No ____
<PAGE>
FIRST FEDERAL SAVINGS BANK OF BRUNSWICK, GEORGIA
AND SUBSIDIARY
Page No.
PART I
Financial Information
Consolidated Statements of Financial 2
Condition at December 31, 1996
and September 30, 1996
Consolidated Statements of Income 3
for the three months ended
December 31, 1996 and 1995
Consolidated Statements of Stockholders' Equity 4
for the three months ended December 31, 1996
and 1995
Consolidated Statements of Cash Flows 5
for the three months ended December 31, 1996
and 1995
Notes to Consolidated Financial Statements 6-9
Management's Discussion and Analysis of
Interim Financial Statements 10-15
PART II Other Information 16
Signatures 17
<PAGE>
FIRST FEDERAL SAVINGS BANK OF BRUNSWICK, GEORGIA
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
December 31 September 30
1996 1996
(Unaudited)
------------------ -------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 5,699,841 $ 4,788,450
Interest bearing deposits in other banks 4,753,220 10,504,682
Federal funds sold and securities
purchased under agreements to resell 4,627,000 545,000
Securities available for sale 13,789,138 16,364,023
Loans, net 218,661,526 209,868,046
Excess servicing fees receivable 135,415 159,109
Real estate owned 656,547 954,904
Premises and equipment, net 1,965,493 1,994,142
Federal Home Loan Bank Stock 1,598,700 1,598,700
Accrued interest:
Loans 1,396,844 1,583,448
Investments 196,964 172,297
Other assets 631,117 584,643
------------------ -----------------
TOTAL ASSETS $ 254,111,805 $ 249,117,444
================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Commercial checking accounts $ 19,127,933 $ 13,561,385
NOW accounts 35,103,701 35,293,128
Savings accounts 20,300,774 20,598,108
Money market deposit accounts 8,617,331 10,571,845
Certificates of deposit 137,060,264 138,051,393
------------------ -------------------
Total deposits 220,210,003 218,075,859
Advances from the Federal Home Loan Bank
and other borrowed money 5,500,000 1,500,000
Advance payments by borrowers for taxes
and insurance 155,469 1,251,325
Accrued expenses and other liabilities 727,941 2,192,353
Deferred income taxes 652,271 72,822
------------------ -------------------
Total liabilities 227,245,684 223,092,359
------------------ -------------------
Commitments and Contingencies
Stockholders' Equity
Common stock $1 par value;
4,000,000 shares authorized,
1,499,939 shares issued and outstanding
at December 31, 1996 and September 30, 1996 1,499,939 1,499,939
Additional paid-in capital 1,550,208 1,550,208
Unrealized loss on investments available for sale (20,496) (162,967)
Retained earnings 23,836,470 23,137,905
------------------ -------------------
Total stockholders' equity 26,866,121 26,025,085
------------------ -------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 254,111,805 $ 249,117,444
================== ===================
</TABLE>
See Notes to unaudited financial statements
2
<PAGE>
FIRST FEDERAL SAVINGS BANK OF BRUNSWICK, GEORGIA
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31
------------------------------------
1996 1995
---------------- ----------------
<S> <C> <C>
INTEREST INCOME:
Interest on loans and mortgage-backed securities $ 4,817,977 $ 4,471,592
Interest on investment securities 130,293 239,203
Interest on federal funds sold and securities
purchased under agreements to resell 145,397 320,885
Dividends on Federal Home Loan Bank stock 29,135 29,574
---------------- ---------------
Total interest income 5,122,802 5,061,254
---------------- ----------------
INTEREST EXPENSE:
Interest on deposits 2,423,096 2,696,236
Interest on advances from the FHLB
and other borrowed money 34,497 39,658
---------------- ----------------
Total interest expense 2,457,593 2,735,894
---------------- ----------------
NET INTEREST INCOME 2,665,209 2,325,360
PROVISION FOR LOAN LOSSES 60,000 60,000
---------------- ----------------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 2,605,209 2,265,360
---------------- ----------------
NONINTEREST INCOME:
Service charges and other fees 578,863 530,675
Net gain on sale of loans 55,204 49,818
Net loss on sale of securities (30,245) (5,396)
Other 41,273 36,751
---------------- ----------------
Total noninterest income 645,095 611,848
---------------- ----------------
NONINTEREST EXPENSE:
Salaries and related benefits 975,616 935,350
Net occupancy and equipment expense 212,438 240,459
Data processing and outside service fees 99,690 123,087
Telephone and postage 75,137 63,026
Advertising 34,635 25,836
Federal insurance premiums 58,554 123,368
(Income)expense from real estate owned, net (7,224) 10,529
Other 267,905 245,011
---------------- ----------------
Total noninterest expense 1,716,751 1,766,666
---------------- ----------------
INCOME BEFORE INCOME TAXES 1,533,553 1,110,542
PROVISION FOR INCOME TAXES 550,000 401,500
---------------- ----------------
NET INCOME $ 983,553 $ 709,042
================ ================
EARNINGS PER SHARE $ .65 $ .47
================ ================
</TABLE>
1.Earnings per share is calculated based on the weighted average common
shares and common share equivalents outstanding during the period.
See Notes to unaudited financial statements.
3
<PAGE>
FIRST FEDERAL SAVINGS BANK OF BRUNSWICK, GEORGIA
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended December 31
1996 1995
------------------ -----------------
<S> <C> <C>
Stockholders' Equity, beginning of period $ 26,025,085 $ 25,506,415
Net income for the three months ended December 31 983,553 709,042
Stock Options exercised 0 0
Cash Dividends paid on Common Stock (284,988) (539,978)
Change in net unrealized appreciation on securities
available for sale, net of taxes 142,471 177,466
================== =================
Stockholders' Equity, December 31 $ 26,866,121 $ 25,852,945
================== =================
</TABLE>
See Notes to unaudited financial statements.
4
<PAGE>
FIRST FEDERAL SAVINGS BANK OF BRUNSWICK, GEORGIA
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES: 1996 1995
------------------- -------------------
<S> <C> <C>
Interest received on loans $ 4,766,666 $ 4,210,680
Interest received on mortgage-backed securities 136,534 278,800
Interest and dividends received on other investment securities 174,532 350,459
Interest received on investment securities 105,626 300,801
Loan fees collected 226,534 171,378
Service charges on deposit accounts 403,137 361,882
Other fees collected 227,779 238,373
Interest paid on deposits (2,433,187) (2,658,074)
Payments for salaries and related benefits (1,180,505) (863,685)
Payment for general and administrative expenses (1,981,809) (583,718)
Income taxes paid, net 0 (60,000)
Interest paid on borrowings (34,497) (39,658)
----------------- -----------------
Net cash provided by operating activities 410,810 1,707,238
------------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of first mortgage loans 2,291,804 3,163,076
Proceeds from sales and maturities of investment securities 0 3,756,902
Principal collected on loans and mortgage-backed securities 24,692,578 19,508,090
Purchase of mortgage-backed securities 0 (7,581,454)
Loans funded (36,386,603) (30,259,963)
Purchase of premises and equipment (net) (45,865) (40,686)
Proceeds or deposits received from sale of
real estate owned 20,000 0
Proceeds from the sale of mortgage-backed securities 4,996,708 0
Decrease in advance payments by borrowers for
taxes and insurance (1,095,856) (952,573)
Other, net (1,490,803) (672,964)
------------------- -------------------
Net cash used in investing activities (7,018,037) (13,079,572)
------------------- -------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase(decrease) in:
Commercial checking accounts 5,566,548 784,233
NOW accounts (189,427) (39,983)
Savings and money market accounts (2,251,848) (286,645)
Proceeds from issuance of certificates of deposit 55,827,832 57,743,785
Payments for maturing certificates of deposit (56,818,961) (58,951,311)
Proceeds from other borrowed money 4,000,000 12,000,000
Dividends paid on common stock (284,988) (539,978)
------------------- -------------------
Net cash provided by financing activities 5,849,156 10,710,101
------------------- -------------------
Net decrease in cash and cash equivalents (758,071) (662,233)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 15,838,132 29,304,497
------------------- -------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 15,080,061 $ 28,642,264
=================== ===================
NET INCOME $ 983,553 $ 709,042
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Depreciation 74,514 86,896
Provision for loan losses 60,000 60,000
Expense from real estate owned, net 45,182 20,528
Loan and excess servicing fees deferred, net 1,692 710
Decrease in interest receivable 161,937 163,004
Increase(decrease) in interest payable (10,091) (38,162)
Increase(decrease) in accrued expenses and other liabilities (905,977) 628,896
------------------- -------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 410,810 $ 1,707,238
=================== ===================
Supplemental Information of Noncash Investing Activites:
Loans exchanged for mortgage-backed securities $ 2,509,085 $ 0
=================== ===================
</TABLE>
See Notes to unaudited financial statements.
5
<PAGE>
FIRST FEDERAL SAVINGS BANK OF BRUNSWICK, GEORGIA
AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The Bank is a savings bank primarily engaged in the business of
obtaining deposits and providing mortgage and other loans to the general public.
The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-Q and do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management of First Federal Savings
Bank, the financial statements reflect all adjustments necessary to present
fairly the financial position of the Bank and the results of operations for the
interim periods. The results of operations for the current quarter are not
necessarily indicative of the actual results which will be realized for the
entire fiscal year. The more significant accounting and reporting policies are
discussed below.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts
of the Bank and its wholly owned subsidiary, First Shelter Service Corporation
("First Shelter"). All significant intercompany balances and transactions have
been eliminated in consolidation.
Interest Income
Income on loans and investments is recognized when the interest is
earned in order to yield a constant rate of return on funds outstanding.
Loan Fees
Loan fees and direct costs of originating successful loans are being
deferred and amortized, net, as an adjustment to interest yield over the
contractual life of the related loan.
Investment Securities and Mortgage-Backed Securities
Investment securities and mortgage-backed securities are recorded at
cost and are adjusted for amortization of premiums and accretion of discounts.
Statement of Financial Accounting Standards ("SFAS") No. 115 "Accounting for
Certain Investments in Debt and Equity Securities", requires that investment
securities be classified as either held-to-maturity, trading, or available for
sale. Held-to-maturity securities are carried at amortized cost. Trading
securities are carried at fair value, with unrealized gains and losses included
in earnings. Available-for-sale securities are carried
6
<PAGE>
at fair value, with unrealized gains and losses excluded from earnings and
reported in stockholders' equity. All investment securities and mortgage-backed
securities were classified as available for sale which decreased stockholders'
equity approximately $20,500, net of taxes, as of December 31, 1996.
Securities Purchased (Sold) Under Agreements to Resell(Repurchase)
Securities purchased under agreements to resell consist primarily of 1-
to 30- day investments having as underlying security U. S. Treasury Securities
and are carried at cost. These agreements call for the resale of substantially
identical securities.
Securities sold under agreements to repurchase consist primarily of 1-
to 30- day borrowings secured by U. S. Treasury Securities and are carried at
cost. These agreements call for the repurchase of substantially identical
securities.
Real Estate Owned
Real estate acquired through foreclosure is initially recorded at the
lower of cost (principal balance of the former mortgage loan plus costs of
obtaining title and possession) or estimated fair value.
Costs related to holding real estate and charges to write down real
estate for subsequent declines in net realizable value are charged to
operations.
Gains on sales of real estate acquired through foreclosure are
recognized based upon cash down payment guidelines established by authoritative
accounting pronouncements. Under provision of the Internal Revenue Code, gains
from the sale of real estate previously acquired through foreclosure by a
savings bank are nontaxable.
Depreciation and Amortization
Depreciation and amortization are provided principally on the
straight-line method over the estimated useful lives of the assets of 20 to 30
years for buildings, 10 years for leasehold improvements, and 3 to 10 years for
furniture and equipment.
Loan Sales and Excess Servicing Fees Receivable
Additional funds for lending are provided by selling participating
interests in loans or whole loans. Under most sales agreements, the Bank
continues to provide loan servicing, which includes collecting payments and
remitting their portion thereof to the buyer, net of servicing fees. Gains or
losses on loan sales are recognized at the time of the sale, and prior to fiscal
year 1991, were calculated by determining the present value of the difference
between the weighted average yield of
7
<PAGE>
the loans sold and the yield guaranteed to the purchaser, adjusted for a normal
servicing fee for the estimated remaining life of the loans sold, generally 12
years. The resulting excess servicing fees receivable have been amortized
against interest income by the level-yield method over the contractual lives of
such loans. The Bank periodically evaluates the amortization of the excess
servicing fees receivable in relation to estimated future net servicing income
of the portfolio based on management's best estimate of the remaining loan
lives. Any unamortized premium or discount on loans which are prepaid is
adjusted through earnings. At December 31, 1996, excess servicing fees received
totalled $135,415. Subsequent to fiscal year 1990, the Bank has sold loans on a
cash gain or loss basis, a method which does not necessitate the creation of an
excess servicing balance upon sale.
Allowance for Loan Losses
The allowance for loan losses is based on management's estimate of the
allowance required to reflect the risks in the loan portfolio, based on
circumstances and conditions known or anticipated at each reporting date. A
provision for loan losses is charged to operations based on management's
periodic evaluation of these risks. Provisions not specifically identified are
based on the Bank's experience and other factors. It is the opinion of
management that the allowance for loan losses is adequate at December 31, 1996
based on conditions reasonably known to management.
Income Taxes
Deferred income taxes are provided on all significant income and
expense items recognized in different periods for financial reporting purposes
and income tax purposes.
Earnings Per Share
Earnings per share are calculated based on the weighted average shares
of common stock and common stock equivalents outstanding during the period. The
following table discloses the weighted average number of shares of common stock
and common stock equivalents outstanding for the related periods:
December 31
1996 1995
---- ----
Three Months Ended 1,524,581 1,516,868
8
<PAGE>
Federal Home Loan Bank Stock
The Bank, as a member of the Federal Home Loan Bank System, is required
to maintain an investment in capital stock of the Federal Home Loan Bank
("FHLB") in an amount equal to the greater of 1% of its outstanding permanent
residential mortgage loans or 1/20 of its outstanding advances. No ready market
exists for the Federal Home Loan Bank stock, and it has no quoted value. For
disclosure purposes such stock is assumed to have a market value equal to cost.
Cash Flows
For purposes of reporting cash flows, cash and cash equivalents include
cash and due from banks, interest-bearing deposits in other banks, short-term
investments, federal funds sold, and securities purchased under agreements to
resell with maturities of three months or less.
Payment of Dividends
On November 14, 1996, the Board of Directors has approved a quarterly
cash dividend of $.19 per share of common stock payable January 2, 1997.
Regulations restrict the Bank from paying dividends on its capital
stock if its net worth would thereby be reduced below the amount required for
the liquidation account or the capital requirements prescribed for insured
institutions.
Reclassifications
Certain prior year amounts have been reclassified to conform to the
current year presentation. All adjustments made to prior year amounts are of a
normal recurring nature.
Subsequent Events
None.
9
<PAGE>
FIRST FEDERAL SAVINGS BANK OF BRUNSWICK, GEORGIA AND SUBSIDIARY
Management's Discussion and Analysis
For the Three Month Periods Ended December 31, 1996 and 1995
Liquidity and Capital Resources. Brunswick's liquidity ratio (the ratio of cash
and eligible securities to withdrawable savings accounts and short-term
borrowings) at December 31, 1996 and 1995 was 9.35% and 17.72% respectively.
Average daily liquidity for the months of December 1996 and 1995 was 11.55% and
18.40%, respectively.
At December 31, 1996, the Bank had short-term borrowings of $4,000,000
representing securities sold under an agreement to repurchase. Additionally, at
December 31, 1996, the Bank had approximately $2.2 million in outstanding
commitments to fund loans. Of that amount, approximately $1.5 million were
commitments to fund loans on single-family residential homes, approximately $.5
million were commitments to fund all other real estate loans, and approximately
$.2 million were to fund various consumer and nonmortgage commercial loans. The
cash needed to fund those loans will be derived from principal payments on
outstanding loans and through the fulfillment of commitments to sell loans in
the secondary markets.
The Financial Institutions Reform, Recovery, and Enforcement Act of
1989 requires savings associations to satisfy three separate capital standards.
The Bank must maintain core capital at least equal to 3.0% of adjusted total
assets and risk-based capital at least equal to 8.0% of risk-weighted assets.
Additionally, the Bank must maintain tangible capital at least equal to 1.5% of
total adjusted assets. At December 31, 1996, the Bank's position with respect to
these requirements was as follows:
(Dollars in Thousands)
Excess
Capital Actual Actual Amount Capital
Standards Amount Percent Required Amount
Tangible $26,870 10.53% $3,829 $23,041
Core 26,870 10.53 7,659 19,211
Risk-based 27,475 14.92* 14,728 12,747
*Represents Risk-Based Capital as a percentage of Risk-Weighted Assets
Impact of Inflation and Changing Prices. The financial statements and related
data presented herein have been prepared in accordance with generally accepted
accounting principles which require the measurement of financial position and
operating results in terms of historical dollars without considering changes
in the relative purchasing power of money over time due to inflation.
10
<PAGE>
The principal element of the Bank's earnings is interest income which may be
significantly affected by the level of inflation and by government monetary and
fiscal policies adopted in response to inflationary and deflationary pressures.
Any future measures designed to restrict the growth in the monetary supply could
cause an increase in short-term interest rates. These rates have a greater
effect on the Bank than the general level of inflation and changing prices and
give added importance to the need to manage the interest rate gap.
Asset/Liability Management. The Bank seeks to minimize interest rate risk by
attempting to maintain its repricing gap as close to zero as possible by
matching assets and liabilities of similar repricing intervals, while achieving
an acceptable interest rate spread. The Bank continues to offer a variety of
loan products that provide a certain degree of interest rate flexibility,
including mortgage loans with adjustable-rate and balloon payment features, and
adjustable-rate short-term consumer and commercial loans. At December 31, 1996,
the Bank had a one-year gap-to-assets ratio of approximately a positive 15.74%
compared to a positive 11.38% at December 31, 1995.
In the Bank's historical measurement of its one year gap, Now and
passbook accounts are treated as non-interest rate sensitive liabilities, and
during the volatile environment over the past year, the rates paid on these
accounts have not varied significantly. However, should interest rates remain at
or increase from current levels, the rates paid on these accounts may rise as
well. Results of Operations. Net income was $983,553 ($.65 per share) for the
three months ended December 31, 1996 compared to $709,042 ($.47 per share) for
the three months ended December 31, 1995.
Total interest income for the three months ended December 31, 1996 and
1995 was $5,122,802 and $5,061,254, respectively. Of the approximately $62,000
increase in interest income from 1995 to 1996, approximately $123,000 was due to
an increase in rate, approximately a negative $60,000 was due to a decrease in
volume and approximately a negative $1,000 was due to a decrease in rate/volume.
The yield on interest earning assets increased from 8.23% during the quarter
ended December 31, 1995, to 8.43% for the three months ended December 31, 1996,
due primarily to growth in the Bank's higher yielding average loan portfolio
from $193.7 million one year ago to $217.1 million in the current period. This
growth was broad-based and included increases in
residential construction and permanent mortgage loans as well as increases in
non-real estate commercial and consumer loans. This loan portfolio growth was
funded by maturities and sales of
11
<PAGE>
securities and by reductions in federal funds sold and other short-term interest
bearing deposits. The average volume of earning assets declined to $243.1
million in the current period from $246.0 million one year ago reflective of the
decline in average certificate of deposit balances to $136.7 million the current
period from $143.2 million one year ago.
Total interest expense for the three months ended December 31, 1996 and
1995 was $2,457,593 and $2,735,894 respectively. Of the approximately $278,000
decrease in interest expense from 1995 to 1996, approximately a negative
$225,000 was due to a decrease in rate, approximately a negative $58,000 was due
to a decrease in volume, and approximately $5,000 was due to an increase in
rate/volume. The cost of interest bearing liabilities decreased from 4.86%
during the quarter ended December 31, 1995 to 4.46% at December 31, 1996,
reflective of higher weighted rates paid on certificates of deposit in the prior
period. Average certificates of deposit balances were $136.7 million in the
current period compared to $143.2 million during the quarter one year ago.
Net interest income for the three months ended December 31, 1996 and
1995 was $2,665,209 and $2,265,360 respectively. The increase in net interest
income is reflective of the increase in the Bank's interest rate spread which
averaged 3.97% during the current period compared to 3.37% in the year ago
period. This increase in spread is consistent with the effects of the above
cited significant increase in the Bank's higher yielding loan portfolio as well
as maturing certificates of deposit having repriced to lower levels.
For the three months ended December 31, 1996 and 1995, the provision
for loan losses was $60,000 and $60,000, respectively. The general allowance for
loan losses was $824,697 at December 31, 1996 as compared to $800,786 at
September 30, 1996, and $896,536 at December 31, 1995. Management believes the
allowance was adequate at December 31, 1996.
Noninterest income increased to $645,095 for the three months ended
December 31, 1996, from $611,848 for the three months ended December 31, 1995.
Service charges and other fees increased from $530,675 one year ago to $578,863
in the current period resulting primarily from increases in various fees and
charges related to Now accounts, and an increase in fees received on
automated teller machine transactions.
Net gain on the sale of loans increased from $49,818 for the three
months ended December 31, 1995 to $55,204 for the three months ended December
31, 1996. The gains recorded in both the
12
<PAGE>
current and prior period resulted from the sale of residential fixed rate
mortgage loans which are sold in the secondary market in order to reduce
interest rate risk. The decline in long-term interest rates experienced during
the first two months of the current quarter allowed for an increase in these
gains despite a reduction in volume of loans sold from $3.2 million one year ago
to $2.3 million in the current period. The volume of fixed rate originations may
vary significantly from period to period depending upon the levels of long-term
interest rates, i.e., 30 year fixed rate mortgage rates and other market
factors.
Net loss on sale of securities increased from $5,396 one year ago to
$30,245 in the current period. The loss reflected in the current period resulted
from the sale of mortgage-backed securities in order to provide funding for
increased loan demand, while the prior period loss related to the sale of a low
coupon bond in order to improve investment portfolio performance.
Noninterest expense decreased to $1,716,751 for the three months ended
December 31, 1996, from $1,766,666 for the three months ended December 31, 1995.
Salaries and related benefits increased to $975,616 for the three months ended
December 31, 1996 from $935,350 for the three months ended December 31, 1995,
resulting primarily from general year-to-year increases in wages and related
payroll taxes mitigated in part, however, by an increase in compensation
deferred to future periods as a consequence of an increase in certain loan
originations. Net occupancy and equipment expense decreased from $240,459 for
the three months ended December 31, 1995 to $212,438 for the three months ended
December 31, 1996, resulting primarily from lower depreciation and maintenance
costs related to furniture, fixtures and equipment. Data processing and outside
service fees decreased from $123,087 from one year ago to $99,690 in the current
period as a result of contract renegotiation with the Bank's outside data
processor. Telephone and postage expense increased to $75,137 in the current
period from $63,026 in the year ago period due to the varied timing of postage
purchases. Advertising expense increased from $25,836 one year ago to $34,635 in
the current period. Continued media and community exposure has been necessary to
maintain deposit flows and lending activity as local competition continues to
increase. Federal insurance premiums decreased from $123,368 one year ago to
$58,554 in the current period commensurate with decreased deposit premium levels
in the current period. Expense from real estate owned, net, decreased to $7,224
from a loss of $10,529 in the year ago period. Expense from real estate owned
encompasses the normal costs of ownership such as property taxes, maintenance
13
<PAGE>
and repairs, utilities, and insurance. Additionally, the above cited amounts
include the results from both gains and losses recognized upon disposal and
write-downs subsequent to foreclosure and are thus dependent upon various
economic and market conditions.
Other expense increased to $267,905 in the current period from $245,011
one year ago. This is primarily attributable to increased litigation costs in
the current period related to the Bank's lawsuit filed September 27, 1991
against C&S/Sovran (now NationsBank). During the course of the Bank's litigation
against C&S/Sovran (NationsBank), legal costs have been and continue to be,
incurred on an event driven basis and therefore, impact certain accounting
periods to a greater degree than others. The ratio of total noninterest expense
to total income was 29.8% for the three months ended December 31, 1996, compared
to 31.1% for the three months ended December 31, 1995. This decrease is
primarily attributable to the increase in interest income and reduced data
processing and Federal Insurance premium expenses in the current period.
Nonperforming Assets. At December 31, 1996, nonperforming assets totalled
$1,891,494, compared to $1,995,803 at September 30, 1996. Nonperforming assets
consist of nonaccrual loans, restructured loans and real estate owned. Potential
problem loans totalled $3,475,743 at December 31, 1996 compared to $2,904,673 at
September 30, 1996. Potential problem loans include certain commercial real
estate loans totalling, in aggregate, $3.0 million and $2.7 million at December
31, and September 30, 1996, respectively. These loans are delinquent 60 days,
however, the Bank is well collateralized.
The following table sets forth the amounts and categories of
Brunswick's nonperforming assets and potential problem loans at the indicated
dates:
Dec. 31, 1996 Sept 30, 1996
------------- -------------
Nonaccrual loans(1) $ 455,241 $ 261,193
Restructured loans (2) 779,706 779,706
Real estate owned (3) 656,547 954,904
------------ ------------
Total nonperforming assets 1,891,494 1,995,803
Potential problem loans(4) 3,475,743 2,904,673
----------- -----------
Total nonperforming assets and potential
problem loans $5,367,237 $4,900,476
========== ==========
Nonperforming assets as a percentage of assets .74% .80%
Nonperforming assets and potential problem
loans as a percentage of assets 2.11% 1.97%
14
<PAGE>
1) Generally refers to (i) certain loans (based primarily on the age of the
loans) that are contractually delinquent for 60 to 90 days, or (ii) certain
mortgage loans on which taxes on the security property are delinquent for two or
more years.
2) Refers to certain loans wherein concessions have been granted to
the borrower(s) for economic reasons related to the borrowers financial
difficulties, as defined by FASB Statement No. 15, "Accounting by Debtors and
Creditors for Troubled Debt Restructuring."
3) Refers to real estate acquired by the Bank through foreclosure or voluntary
deed, and includes loans made financing the sale of foreclosed properties to new
borrowers wherein the terms of the transaction did not meet the requirements for
sale under generally accepted accounting principles.
4) Potential problem loans are those loans that management has identified as
having certain characteristics that could impair the ability of the borrower to
comply with the present loan repayment terms and that may result in such loans
being placed on non-accrual status or becoming troubled debt restructuring, or
real estate owned in the future. These loans are generally 60 days past due and
are monitored by management to facilitate further attention if necessary.
15
<PAGE>
FIRST FEDERAL SAVINGS BANK OF BRUNSWICK, GEORGIA
AND SUBSIDIARY
PART II
ITEM 1. Legal Proceedings
None.
(From time to time, the Bank is a party to legal
proceedings in the ordinary course of business
wherein it enforces its security interest in loans
made by it.)
ITEM 2. Changes in Securities
Not applicable.
ITEM 3. Defaults upon Senior Securities
Not applicable.
ITEM 4. Submission of Matters to a Vote of Security Holders
On January 22, 1997, the annual Stockholders Meeting of
First Federal Savings Bank of Brunswick, Georgia was
assembled at the Bank's Main office located at 777
Gloucester Street, Brunswick, Georgia.
In addition to various procedural matters acted upon, the
following individuals were re-elected to serve as directors:
` William O. Faulkner - 3 year term
John J. Rogers - 3 year term
Jack Torbett - 3 year term
L. Gerald Wright - 3 year term
Directors whose terms continued after the meeting
were:
James F. Barger
J. D. Benefield, Jr.
James H. Gash
Mack F. Mattingly
T. Gillis Morgan, III
D. Paul Owens
Ben T. Slade, III
ITEM 5. Other Information
None.
ITEM 6. Exhibits and Reports on Form 8-K
None.
16
<PAGE>
FIRST FEDERAL SAVINGS BANK OF BRUNSWICK, GEORGIA
AND SUBSIDIARY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST FEDERAL SAVINGS BANK
OF BRUNSWICK, GEORGIA
By: /s/ Ben T. Slade, III
-----------------------------
Ben T. Slade, III, President
Date: February 13, 1997
By: /s/ Robert B. Sams
-----------------------------
Robert B. Sams, Controller
Date: February 13, 1997
17
<PAGE>
<PAGE>
OFFICE OF THRIFT SUPERVISION
WASHINGTON, D.C. 20552
----------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 29, 1997
FIRST FEDERAL SAVINGS BANK OF BRUNSWICK, GEORGIA
(Exact name of registrant as specified in charter)
Chartered by the
Office of Thrift Supervision
under the laws of the
United States 3175 58-0175025
(State or other jurisdiction (Office of Thrift (IRS employer
of incorporation) Supervision identification no.)
Docket Number)
777 Gloucester Street, Brunswick, Georgia 31520
- ------------------------------------------ -------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (912) 265-1410
Not Applicable
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
First Federal Savings Bank of Brunswick, Georgia ("First Federal")
previously announced that it had entered into a series of agreements and
amendments thereto (the "Agreements") between NationsBank Corporation
("NationsBank") (as successor to C&S/Sovran Corporation and its affiliates)
pursuant to which a wholly-owned subsidiary of NationsBank will merge with and
into First Federal, and outstanding shares of First Federal Common Stock, will
convert into the right to receive shares of NationsBank Common Stock, in
accordance with the terms of the Agreements. Consummation of the transactions
contemplated by the Agreements is subject to certain conditions, including the
receipt of prior approval by the Board of Governors of the Federal Reserve
System, the Office of Thrift Supervision (the "OTS"), and the Georgia Department
of Banking and Finance. The transaction also is subject to the affirmative
approval of the holders of at least two-thirds of the outstanding shares of
First Federal Common Stock.
NationsBank has filed a Registration Statement with the Securities and
Exchange Commission (the "SEC") registering under the Securities Act of 1933, as
amended, the shares of NationsBank Common Stock to be issued to First Federal
stockholders in the transaction. First Federal also has filed with the OTS
preliminary Proxy materials in connection with the solicitation of Proxies by
the Board of Directors of First Federal for use at a Special Meeting of First
Federal Stockholders to be held for consideration of approval of the Agreements.
First Federal intends to deliver such materials to First Federal stockholders as
soon as practicable after SEC clearance of the Registration Statement and OTS
clearance of the Proxy materials.
It is anticipated that the First Federal Proxy materials will
incorporate by reference certain documents previously filed by NationsBank with
the SEC. First Federal is hereby filing
1
with the OTS through this Form 8-K the following documents previously filed by
NationsBank with the SEC and which are to be incorporated by reference by
NationsBank into the First Federal Proxy materials: (a) the NationsBank Annual
Report on Form 10-K for the year ended December 31, 1995, as filed March 29,
1996; (b) the NationsBank Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996, as filed May 10, 1996; June 30, 1996, as filed August 14, 1996;
and September 30, 1996, as filed November 13, 1996; (c) the description of
NationsBank Common Stock contained in the NationsBank Registration Statement
filed pursuant to Section 12 of the Exchange Act as modified by the NationsBank
Current Report on Form 8-K filed January 16, 1997; (d) the Boatmen's Bancshares,
Inc. Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996, as
filed on May 15, 1996; June 30, 1996, as filed August 12, 1996; and September
30, 1996, as filed on November 13, 1996; and (e) the NationsBank Current Reports
on Form 8-K filed January 12, 1996; February 1, 1996; March 8, 1996;April 17,
1996; May 16, 1996; July 5, 1996; July 31, 1996; September 6, 1996 (as amended
on September 11, 1996 and November 13, 1996); September 20, 1996 (as amended on
September 23, 1996); October 25, 1996; November 14, 1996; December 4, 1996;
December 17, 1996 (two Forms 8-K); and January 16, 1997. In addition to the
foregoing, NationsBank also will incorporate into the First Federal Proxy
materials all documents filed by NationsBank with the SEC pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended,
after the date of the First Federal Proxy materials and prior to the time at
which the First Federal Special Meeting has been finally adjourned.
2
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Financial Statements of Business Acquired: None.
(b) Pro Forma Financial Information: None
(c) Exhibits:
99.1 The NationsBank Annual Report on Form 10-K for the year
ended December 31, 1995, as filed March 29, 1996.
99.2 The NationsBank Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1996, as filed May 10, 1996; June 30,
1996, as filed August 14, 1996; and September 30, 1996, as
filed November 13, 1996.
99.3 The description of NationsBank Common Stock contained in the
NationsBank Registration Statement filed pursuant to Section
12 of the Exchange Act as modified by the NationsBank Current
Report on Form 8-K filed January 16, 1997.
99.4 The Boatmen's Bancshares, Inc. Quarterly Reports on Form 10-Q
for the quarters ended March 31, 1996, as filed on May 15,
1996; June 30, 1996, as filed August 12, 1996; and September
30, 1996, as filed on November 13, 1996.
99.5 The NationsBank Current Reports on Form 8-K filed January 12,
1996; February 1, 1996; March 8, 1996;April 17, 1996; May 16,
1996; July 5, 1996; July 31, 1996; September 6, 1996 (as
amended on September 11, 1996 and November 13, 1996);
September 20, 1996 (as amended on September 23, 1996); October
25, 1996; November 14, 1996; December 4, 1996; December 17,
1996 (two Forms 8-K); and January 16, 1997.
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST FEDERAL SAVINGS BANK OF
BRUNSWICK, GEORGIA
By: /s/ Ben T. Slade, III
--------------------------------
Ben T. Slade, III
President
Date: January 29, 1997
4
